Asset a Has an Expected Return of 15% and a Reward-To-Variability

question 9

Multiple Choice

Asset A has an expected return of 15% and a reward-to-variability ratio of .4. Asset B has an expected return of 20% and a reward-to-variability ratio of .3. A risk-averse investor would prefer a portfolio using the risk-free asset and ________.

• A) asset A
• B) asset B
• C) no risky asset
• D) The answer cannot be determined from the data given.

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Definitions:

Food Chain

A sequence of organisms each dependent on the next as a source of food, illustrating the flow of energy and nutrients from one organism to another.

Kilocalories

A unit of energy measurement in food, commonly called a calorie, equal to 1,000 real calories or the energy needed to raise the temperature of 1 kilogram of water by 1°C.

Terrestrial Ecosystems

Ecosystems found on land as opposed to aquatic environments, characterized by the organisms that inhabit them and the environment they live in.

Aquifers

Underground layers of water-bearing permeable rock or materials through which groundwater can move and be stored.