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A Portfolio Consists of Two Securities: a Risk-Free Asset and an Equity

question 75

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A portfolio consists of two securities: a risk-free asset and an equity security.The expected return on the risk-free asset is 4.75%.The expected return of the equity security is 17% with a standard deviation of 23%.What is the portfolio expected return if the standard deviation for the portfolio is 18%?


Definitions:

Rhizarians

A group of mostly unicellular eukaryotic organisms that include foraminifera, radiolarians, and cercozoans, characterized by their amoeboid movement and complex shell structures.

Coccolithophorids

A group of planktonic algae that produce calcium carbonate plates known as coccoliths, contributing significantly to marine sediments.

Brown Algae

A large group of mostly marine multicellular algae, including many seaweeds, that are typically brown due to the presence of fucoxanthin pigment.

Representative Clade

A taxonomic group representing a branch on the tree of life, including an ancestor and all its descendants.

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