An Investor Can Design a Risky Portfolio Based on Two

question 19

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 proportion of the optimal risky portfolio that should be invested in stock B is approximately ________.

• A) 29%
• B) 44%
• C) 56%
• D) 71%

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Definitions:

Victim of Abuse

A person who has suffered from physical, emotional, sexual, or psychological harm inflicted by another.

Domestic Violence

A pattern of abusive behavior in any relationship that is used by one partner to gain or maintain control over another intimate partner.

Dating Relationships

Interpersonal relationships with a romantic or potentially romantic focus between individuals.

Child Abuse

Physical, emotional, or sexual harm inflicted upon a child, including neglect and exploitation.