Suppose You Borrow at the Risk-Free Rate an Amount Equal

question 78

Multiple Choice

Suppose you borrow at the risk-free rate an amount equal to your initial wealth and invest in a portfolio with an expected return of 16% and a standard deviation of returns of 20%. The risk-free asset has an interest rate of 4%; calculate the expected return on the resulting portfolio:

• A) 20%
• B) 32%
• C) 28%
• D) none of the above

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Definitions:

Essential Vitamins

Nutrients that the body cannot synthesize in sufficient quantities and must be obtained from the diet to maintain health.

Track Moving Objects

The ability to monitor and follow the position and trajectory of objects in motion, commonly used in surveillance, video games, and robotics.

Bright Lights

High-intensity illumination, which can be natural or artificial, and is often used to enhance visibility in a given area or setting.

Response

Response refers to a reaction or reply to a specific stimulus or situation.