If the Expected Return to a Risky Portfolio Is 12

question 1

Multiple Choice

If the expected return to a risky portfolio is 12% with standard deviation 10%, and if the return to the riskless asset is 7%, then the expected return and Volatility for a portfolio consisting of 1/2) riskless bonds and 1/2) the risky portfolio would be:

• A) 7% return, 10% Volatility
• B) 9.5% return, 5% Volatility
• C) 9.5% return, 10% Volatility
• D) 10% return, 10% Volatility
• E) Cannot be computed with the information given.

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