An Investor Constructs a Portfolio with a 75% Allocation to a Stock

question 42

Multiple Choice

An investor constructs a portfolio with a 75% allocation to a stock index and a 25% allocation to a risk free asset.The expected returns on the risk-free asset and the stock index are 3% and 10%,respectively.The standard deviation of returns on the stock index is 14%.Calculate the expected standard deviation of the portfolio.

• A) 7.5%
• B) 9.0%
• C) 10.5%
• D) 11.5%
• E) 13.0%

---

Definitions:

Package

A collection of items or data treated as a unit.

Suggestive Mark

A trademark that hints at the nature or quality of the goods or services it represents, without describing them directly.

Characteristic

A distinguishing trait, quality, or property that defines or identifies something.

Common Name

A name by which a species is known to the general public, as opposed to its scientific or Latin name.