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

question 81

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.
-The expected return on the alternative investment having the highest possible expected return while having the same volatility as Google is closest to?

• A)21.6%
• B)19.6%
• C)23.4%
• D)35.0%

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Definitions:

Effective Forecasting

The process of predicting future trends, demand, and events accurately using historical data, statistical models, and market analysis to inform decision-making.

Moving Average

A statistical technique used to analyze data points by creating a series of averages of different subsets of the full data set, commonly used in stock market analysis.

Simple Exponential Smoothing

A time series forecasting method for univariate data that applies smoothing factors to make projections, giving more weight to recent observations while considering trends in historical data.

Holt's Method

A forecasting technique that extends exponential smoothing to allow forecasting of data with trends, accommodating changes over time.