You Are Considering Investing $1,000 in a T-Bill That Pays

question 31

Multiple Choice

You are considering investing $1,000 in a T-bill that pays 0.05 and a risky portfolio, P, constructed with two risky securities, X and Y. The weights of X and Y in P are 0.60 and 0.40, respectively. X has an expected rate of return of 0.14 and variance of 0.01, and Y has an expected rate of return of 0.10 and a variance of 0.0081. What would be the dollar value of your positions in X, Y, and the T-bills, respectively, if you decide to hold a portfolio that has an expected outcome of $1,120?

• A) $568; $378; $54
• B) $568; $54; $378
• C) $378; $54; $568
• D) $108; $514; $378
• E) Cannot be determined.

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Definitions:

Sight Glass

Allows a technician to see the flow of a liquid in a line (such as fuel or refrigerant) for diagnostic purposes.

Desiccant Breakdown

The degradation of desiccant material, which is used to absorb moisture, often leading to loss of effectiveness in systems such as air dryers or HVAC units.

High-Pressure Gas

Gas that is stored under high pressure, often used for energy storage, as a propellant, or in industrial processes.

High-Pressure Liquid

Refers to a liquid under pressure greater than atmospheric pressure, often found in hydraulic systems to transmit power.