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%

---

Definitions:

Time Constraints

Limits or deadlines that define the amount of time available to complete a task or project.

Functional Fixedness

A cognitive bias that limits a person to using an object only in the way it is traditionally used, hindering problem-solving and creativity.

Hammer

A tool typically used to drive nails into, or pull nails from, some other object, generally involving a handle and a heavy head.

Mental Set

A tendency to approach situations in a fixed way based on previous experiences, potentially hindering problem-solving.