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.

---

Definitions:

Serum Level

The concentration of a specific substance in the liquid part of the blood, after the blood has clotted, used to diagnose or monitor diseases.

Lithium

A chemical element used in the treatment of bipolar disorder and other mental health conditions.

Therapeutic Limits

Boundaries established by healthcare providers to maintain a professional and safe relationship with their patients.

Bipolar Disorder

A mental illness characterized by significant mood swings, including periods of depression and periods of mania or hypomania.