Margaret Has to Choose Between Two Apartments

question 176

Multiple Choice

Margaret has to choose between two apartments. One apartment is bright and airy but is also more expensive. The other is neither bright nor airy but is much cheaper than the other apartment. Which apartment should Margaret choose and why?

• A)She should choose the more expensive apartment because quantitative differences are more important than qualitative differences.
• B)She should choose the cheaper apartment because it will make her happier in the long run.
• C)She should choose the more expensive apartment because it will make her happier in the long run.
• D)She should choose the cheaper apartment because quantitative differences are more important than qualitative differences.

Assess investment valuations relative to the investor's required return and the capital market line.

Calculate the optimal percentage allocation between risky and risk-free assets to achieve a desired portfolio return.

Calculate the optimal percentage allocation between risky and risk-free assets to achieve a desired portfolio standard deviation.

Understand the concept and calculation of the capital allocation line and its slope.

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