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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Definitions:

Flashbulb Memories

Vivid, detailed recollections of significant or traumatic events, which are imprinted with high clarity as if taken by a camera’s flash.

Vivid

Descriptive of something strikingly bright or intense, either visually or in terms of perception, making it likely to attract attention or create a strong impression.

Emotional Areas

Regions within the brain, such as the amygdala and prefrontal cortex, that are fundamentally involved in processing, regulating, and responding to emotional stimuli.

Autobiographical Memory

A type of memory system consisting of episodes recollected from an individual's life, based on a combination of episodic (personal experiences) and semantic (facts and concepts) memory.