Exhibit 79
USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 53

Multiple Choice

Exhibit 7.9
USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) $$\begin{array} { c c } \text { Asset } ( \mathrm { A } ) & \text { Asset } ( \mathrm { B } ) \\\hline \mathrm { E } \left( \mathrm { R } _ { \mathrm { A } } \right) = 18 \% & \mathrm { E } \left( \mathrm { R } _ { \mathrm { B } } \right) = 13 \% \\\left( \sigma _ { \mathrm { A } } \right) = 7 \% & \left( \sigma _ { \mathrm { B } } \right) = 6 \% \\W _ { \mathrm { A } } = 0.3 & W _ { \mathrm { B } } = 0.7 \\\mathrm { COV } V _ { \mathrm { A,B } } = 0.0011\end{array}$$
-Refer to Exhibit 7.9. 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)10.10%
• B)11.60%
• C)13.88%
• D)14.50%
• E)15.37%

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Definitions:

Conversion Cost

The sum of direct labor and manufacturing overhead costs, representing the costs to convert raw materials into finished goods.

Equivalent Units

A concept used in cost accounting to convert units of production into an amount of completed units to measure progress.

Conversion Costs

Costs specifically associated with converting raw materials into finished goods, which include labor and overhead.

Whole Units

The number of units in production during a period, whether completed or not.