Exhibit 73
USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 3

Multiple Choice

Exhibit 7.3
USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) $$\begin{array} { c c } \text { Asset } ( \mathrm { A } ) & \text { Asset } ( \mathrm { B } ) \\\hline \mathrm { E } \left( \mathrm { R } _ { \mathrm { A } } \right) = 9 \% & \mathrm { E } \left( \mathrm { R } _ { \mathrm { B } } \right) = 11 \% \\\left( \sigma _ { \mathrm { A } } \right) = 4 \% & \left( \sigma _ { \mathrm { B } } \right) = 6 \% \\W _ { \mathrm { A } } = 0.4 & W _ { \mathrm { B } } = 0.6 \\\mathrm { COV }_ { A,B } = 0.0011\end{array}$$
-Refer to Exhibit 7.3. 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)8.95%
• B)9.30%
• C)9.95%
• D)10.20%
• E)10.70%

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Definitions:

Quaker Merchants

Businesspeople who adhered to the Religious Society of Friends, or Quakers, known for their ethical business practices and emphasis on peace and equality.

Jewish Merchants

Individuals of Jewish heritage who were involved in various forms of trade and commerce historically.

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A crop that generates a substantial profit for the farmer or the economy, often due to high demand and/or premium pricing.

French and Indian War

A conflict from 1754 to 1763 in North America, part of a global struggle between Britain and France, also known as the Seven Years' War.