Exhibit 72
USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 50

Multiple Choice

Exhibit 7.2
USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) $$\begin{array} { c c } \text { Asset } ( \mathrm { A } ) & \text { Asset } ( \mathrm { B } ) \\\hline \mathrm { E } \left( \mathrm { R } _ { \mathrm { A } } \right) = 25 \% & \mathrm { E } \left( \mathrm { R } _ { \mathrm { B } } \right) = 15 \% \\\left( \sigma _ { \mathrm { A } } \right) = 18 \% & \left( \sigma _ { \mathrm { B } } \right) = 11 \% \\W _ { \mathrm { A } } = 0.75 & W _ { \mathrm { B } } = 0.25 \\\mathrm { CO } V _ { \mathrm { AB } _ { \mathrm { B } } } = - 0.0009\end{array}$$
-Refer to Exhibit 7.2. 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)18.64%
• B)20.0%
• C)22.5%
• D)13.65%
• E)11%

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Definitions:

Cost of Goods Sold

The total of all costs used to create a product or service, which has been sold.

Material Amount

Refers to a sum or quantity of materials that is considered significant or substantial in size or value.

Underapplied Overhead

A situation where the allocated manufacturing overhead is less than the actual overhead incurred.

Factory Overhead

All indirect costs associated with manufacturing, including utilities, maintenance, and salaries of administrative personnel within a factory, but not directly tied to specific units of production.