You Are Considering Investing $1000 in a Complete Portfolio

question 25

Multiple Choice

You are considering investing $1000 in a complete portfolio. The complete portfolio is composed of Treasury notes that pay 5% and a risky portfolio, P, constructed with two risky securities X and Y. The optimal weights of X and Y in P are 60% and 40% respectively. X has an expected rate of return of 14% and Y has an expected rate of return of 10%. The dollar values of your positions in X, Y, and Treasury notes would be ________, ________ and ________ respectively if you decide to hold a complete portfolio that has an expected return of 8%.

• A)$162, $595, $243
• B)$243, $162, $595
• C)$595, $162, $243
• D)$595, $243, $162

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Definitions:

Normative-sequential

A developmental concept indicating that certain behaviors and milestones tend to occur in a specific, predictable order as individuals age.

Social Clock

The culturally preferred timing of major life events, such as marriage, parenthood, and retirement.

Past Generations

Referring to the people who lived before the current generation, often used in discussions about family heritage, history, or genetics.

Social Clock

The societal expectations that dictate the appropriate timing for major life events, such as marriage, parenthood, and retirement.