An Investor Wishes to Construct a Portfolio Consisting of a 70

question 67

Multiple Choice

An investor wishes to construct a portfolio consisting of a 70% allocation to a stock index and a 30% allocation to a risk free asset.The return on the risk-free asset is 4.5% and the expected return on the stock index is 12%.Calculate the expected return on the portfolio.

• A) 8.25%
• B) 16.50%
• C) 17.50%
• D) 9.75%
• E) 14.38%

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Definitions:

Cash Discounts

A reduction in the amount owed by a customer if payment is made within a specified time frame.

Period-End Adjusting Entry

An accounting record made at the end of an accounting period to allocate income and expenditures to the appropriate period.

Delivery Expense

Costs incurred by a company to transport its products to customers, including freight, shipping, and handling charges.

General and Administrative Expense

Expenses related to the day-to-day operations of a business that are not directly tied to production, such as salaries of executive staff, rent, and utilities.