Allison's Portfolio Has an Expected Return of 14% and a Standard

question 17

Multiple Choice

Allison's portfolio has an expected return of 14% and a standard deviation of 20%. Brianna's portfolio has an expected rate of return of 11% and a standard deviation of 12%. The risk-free rate is 3%. According to the Sharpe measure,

• A) Allison has the better portfolio.
• B) Brianna has the better portfolio.
• C) the portfolio's are equally desirable.
• D) the answer depends on Allison and Brianna's risk tolerance.

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Definitions:

Strict Laws

Regulations that are rigorous in nature and are enforced with strict penalties for violations.

Pluralistic Ignorance

A situation where the majority of group members privately reject a norm, but incorrectly assume that most others accept it, leading to a continuation of the norm in the group.

Physically Attractive

Having qualities that appeal to the senses, especially sight, often conforming to societal standards of beauty.

Helper

A person or thing that provides assistance or support.