Use the Following Information to Answer the Question(s)below

question 17

Multiple Choice

Use the following information to answer the question(s) below.
Your investment portfolio consists of $10,000 worth of Google stock.Suppose that the risk-free rate is 4%,Google stock has an expected return of 14% and a volatility of 35%,and the market portfolio has an expected return of 12% and a volatility of 18%.Assume that the CAPM assumptions hold.
-What alternative investment has the lowest possible volatility while having the same expected return as Google?

• A)-25% in the risk-free asset and +125% in the market portfolio
• B)-20% in the risk-free asset and +120% in the market portfolio
• C)0% in the risk-free asset and +100% in the market portfolio
• D)20% in the risk-free asset and +80% in the market portfolio

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Definitions:

REBT

Rational Emotive Behavior Therapy (REBT) is a form of psychotherapy that identifies irrational beliefs, challenges them, and encourages the adoption of more rational and adaptive thought patterns to address emotional and behavioral issues.

Unfortunate Events

Circumstances or occurrences that have negative outcomes or are considered unlucky.

Cognitive Restructuring

A therapeutic technique used to challenge and change negative and irrational thought patterns to reduce psychological distress.

Chronic Depression

A long-term form of depression, also known as dysthymia, characterized by persistent low mood and other depressive symptoms.