The Expected Return on the Market Is 12

question 54

Multiple Choice

The expected return on the market is 12.5% with a standard deviation of 25%.The risk-free rate is 5.5%.What is the expected return on an efficient portfolio with a standard deviation of 30%?

• A)4.10%
• B)11.33%
• C)13.90%
• D)28.90%

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Definitions:

LIFO

Last In, First Out, an inventory valuation method where the most recently produced items are recorded as sold first.

FIFO

An accounting method where the first items placed in inventory are the first sold or used.

Inventories

Quantities of goods in stock that are held by a business for the purpose of sale or production.