Exhibit 71
USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 66

Multiple Choice

Exhibit 7.1
USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) $$\begin{array} { c c } \text { Asset } ( \mathrm { A } ) & \text { Asset } ( \mathrm { B } ) \\\hline \mathrm { E } \left( \mathrm { R } _ { \mathrm { A } } \right) = 10 \% & \mathrm { E } \left( \mathrm { R } _ { \mathrm { B } } \right) = 15 \% \\\left( \sigma _ { \mathrm { A } } \right) = 8 \% & \left( \sigma _ { \mathrm { B } } \right) = 9.5 \% \\W _ { \mathrm { A } } = 0.25 & W _ { \mathrm { B } } = 0.75 \\\operatorname { Cov } _ { \mathrm { A } B } = 0.006\end{array}$$
-Refer to Exhibit 7.1. What is the expected return of a portfolio of two risky assets if the expected return E(R_i) , standard deviation ( $\sigma$ _i) , covariance (COV_i,j) , and asset weight (W_i) are as shown above?

• A)8.79%
• B)12.5%
• C)13.75%
• D)7.72%
• E)12%

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Definitions:

Unsaturated

Referring to a compound, especially fats or oils, with at least one double bond between carbon atoms, allowing the addition of more hydrogen atoms.

Locard's Exchange Principle

A principle in forensic science that states every contact leaves a trace, meaning a criminal will always bring something into the crime scene and leave with something from it.

Cellulose

A complex carbohydrate or polysaccharide that forms the main structure of plant cell walls and is used in the production of paper, textiles, and various bioproducts.

Sheep Wool

The soft, thick, curly hair that grows on sheep, used extensively in textiles for clothing, blankets, and other products.