You Have $5,000 Cash to Invest and Borrow Another $5,000

question 44

Multiple Choice

You have $5,000 cash to invest and borrow another $5,000 at the risk-free rate of 5%. You invest all of it in Portfolio Z, with an expected return of 15% and a standard deviation of 20%.
-Refer to the information above. Calculate the standard deviation of the returns on this portfolio.

• A)28.3%
• B)40.0%
• C)30.0%
• D)This cannot be calculated without knowing the variance of the returns on the risk-free asset.

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Definitions:

Generalization

The psychological process by which a response is made to a stimulus similar to but not identical to the original conditioned stimulus.

Latent Learning

Learning that occurs without any obvious reinforcement and is not immediately demonstrated in the learner's behavior.

Tolman

Edward C. Tolman was a cognitive psychologist known for his contributions to the understanding of learning and motivation through cognitive maps and latent learning.

Watson

Refers to John B. Watson, an American psychologist who established the psychological school of behaviorism.