An Investor Can Design a Risky Portfolio Based on Two

question 65

Multiple Choice

An investor can design a risky portfolio based on two stocks, A and B. Stock A has an expected return of 18% and a standard deviation of return of 20%. Stock B has an expected return of 14% and a standard deviation of return of 5%. The correlation coefficient between the returns of A and B is .50. The risk-free rate of return is 10%. The standard deviation of return on the optimal risky portfolio is ________.

• A) 0%
• B) 5%
• C) 7%
• D) 20%

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Definitions:

Silent Authority

Influence exerted through implied power or status without the explicit use of words or commands.

Assertiveness

The quality of being self-assured and confident without being aggressive, enabling individuals to express their thoughts and feelings in a respectful and direct manner.

Non-substitutability

A characteristic of resources in an organization that cannot be replaced with an alternative without incurring a significant loss or decrease in performance.

Displaying Diplomas

Displaying diplomas involves showing academic or professional certificates in a workspace to signify credibility and qualifications.