Given an Optimal Risky Portfolio with Expected Return of 12

question 17

Multiple Choice

Given an optimal risky portfolio with expected return of 12%, standard deviation of 26%, and a risk free rate of 3%, what is the slope of the best feasible CAL?

• A) 0.64
• B) 0.14
• C) 0.08
• D) 0.35
• E) 0.36

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Definitions:

Market Supply Curve

A graphical representation showing the relationship between the price of a good and the quantity of that good that all suppliers are willing to produce and sell.

Competitive Industry

A market scenario where numerous producers compete to offer goods or services to consumers, ensuring no single entity dominates the market prices or supply.

Price-Quantity

Relationship between the price of a good and the quantity of the good supplied or demanded.

Linear Marginal Cost

Refers to a situation where the additional cost of producing one more unit of output is constant.