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:

Impulses

Sudden desires or urges that can lead an individual to act without forethought, often based on immediate emotional responses.

Freud

Freud, an Austrian neurologist, introduced psychoanalysis, which involves therapeutic conversations between a psychoanalyst and a patient to treat mental illnesses.

Sexual

Pertaining to or involving the sex organs, sexual acts, or sexual desire.

Psychoanalytic Theory

A theory developed by Sigmund Freud that emphasizes the influence of the unconscious mind on behavior.