You Invest $1,000 in a Complete Portfolio

question 41

Multiple Choice

You invest $1,000 in a complete portfolio. The complete portfolio is composed of a risky asset with an expected rate of return of 16% and a standard deviation of 20% and a treasury bill with a rate of return of 6%.
-The return on the risky portfolio is 15%.The risk-free rate as well as the investor's borrowing rate is 10%.The standard deviation of return on the risky portfolio is 20%.If the standard deviation on the complete portfolio is 25%,the expected return on the complete portfolio is _________.

• A) 6.00%
• B) 8.75 %
• C) 10.00%
• D) 16.25%

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Definitions:

Monopolizing

The act of acquiring exclusive control over a particular market or commodity, often seen as harmful to competition.

Tying Agreements

Business arrangements where the sale of one product is tied to the purchase of another product.

Seller's Product

The goods or services offered to buyers by a seller in the marketplace.

Antitrust Laws

Legislation enacted to prevent new monopolies from forming and to break up those that already exist, ensuring competition in the marketplace.