Exhibit 715
Use the Information Below for the Following Problem(S)

question 80

Multiple Choice

Exhibit 7.15
Use the Information Below for the Following Problem(S)
$\begin{array}{cc}\text { Asset }(\mathrm{A}) & \text { Asset }(\mathrm{B}) \\\hline \mathrm{E}\left(\mathrm{R}_{\mathrm{A}}\right) =14 \% & \mathrm{E}\left(\mathrm{R}_{\mathrm{B}}\right) =16 \% \\\left(\sigma_{\mathrm{A}}\right) =13 \% & \left(\sigma_{\mathrm{B}}\right) =18 \% \\\mathrm{~W}_{\mathrm{A}}=0.4 & \mathrm{~W}_{\mathrm{B}}=0.6\end{array}$
                $\mathrm{COV}_{\mathrm{AB}}=0.0024$

-Refer to Exhibit 7.15.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) 13.8%
• B) 14.6%
• C) 15.0%
• D) 15.2%
• E) 16.8%

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