An Investor Invests 70% of Her Wealth in a Risky

question 2

Multiple Choice

An investor invests 70% of her wealth in a risky asset with an expected rate of return of 15% and a variance of 5% and she puts 30% in a Treasury bond that pays 5%. Her portfolio's expected rate of return and standard deviation are ________ and ________ respectively.

• A)10.0%, 6.7%
• B)12.0%, 22.4%
• C)12.0%, 15.7%
• D)10.0%, 35.0%

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Definitions:

Wickard V. Filburn

A landmark Supreme Court case in 1942 that greatly expanded the power of the federal government to regulate economic activity under the Commerce Clause.

U.S. Constitution

The supreme law of the United States that establishes the national framework of government and the fundamental rights of citizens.

Involuntary Dissolution

The compulsory termination of a corporation's existence or the discontinuation of its operations by legal authority, often due to failure to comply with certain laws or obligations.

Corporate Expansion

The process of a company increasing its business operations and market presence, which may involve opening new locations, acquiring other businesses, or expanding its product or service offerings.