Exhibit 75
Use the Information Below for the Following Problem(S)

question 16

Multiple Choice

Exhibit 7.5
Use the Information Below for the Following Problem(S)
$\begin{array}{cc}\text { Asset }(A) & \text { Asset }(\mathrm{B}) \\\hline \mathrm{E}\left(\mathrm{R}_{\mathrm{A}}\right) =8 \% & \mathrm{E}\left(\mathrm{R}_{\mathrm{B}}\right) =15 \% \\\left(\sigma_{\mathrm{A}}\right) =7 \% & \left(\sigma_{\mathrm{B}}\right) =10 \% \\\mathrm{~W}_{\mathrm{A}}=0.4 & \mathrm{~W}_{\mathrm{B}}=0.6 \\\mathrm{COV}_{A,B}=0.0006\end{array}$

-Refer to Exhibit 7.5.What is the expected return of a portfolio of two risky assets if the expected return E(R?) ,standard deviation (s?) ,covariance (COV?,?) ,and asset weight (W?) are as shown above?

• A) 8.0%
• B) 12.2%
• C) 7.4%
• D) 9.1%
• E) 11.6%

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Definitions:

Auditory Nerve

A cranial nerve that transmits sound information from the cochlea in the inner ear to the brain.

Ossicles

Three tiny bones in the middle ear known as the malleus, incus, and stapes, which play a critical role in transmitting sound vibrations to the inner ear.

Place Theory

A theory that suggests that our perception of sound depends on where each component frequency produces vibrations along the basilar membrane of the cochlea.

Hermann von Helmholtz

A German physician and physicist who made significant contributions to the understanding of the physiology of vision, hearing, and electromagnetism.