An Investor Can Design a Risky Portfolio Based on Two

question 1

Multiple Choice

An investor can design a risky portfolio based on two stocks, A and B. Stock A has an expected return of 21% and a standard deviation of return of 39%. Stock B has an expected return of 14% and a standard deviation of return of 20%. The correlation coefficient between the returns of A and B is .4. The risk-free rate of return is 5%. The expected return on the optimal risky portfolio is approximately ________. (Hint: Find weights first.)

• A) 14%
• B) 16%
• C) 18%
• D) 19%

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Definitions:

Warm Room Temperature

A temperature setting in an indoor environment that feels comfortably warm to the majority of people, typically around 68 to 77 degrees Fahrenheit (20 to 25 degrees Celsius).

Aggressive Behaviour

Actions or patterns of actions aimed at causing harm, intimidation, or asserting dominance over others.

Hitting Incidents

Episodes or occurrences of physical aggression where an individual intentionally strikes another.

Dependent Variable

is the variable in an experiment that is expected to change in response to manipulations in the independent variable.