Stock a Has an Expected Return of 16 Percent,and Stock

question 24

Multiple Choice

Stock A has an expected return of 16 percent,and stock B has an expected return of 8 percent.However,the risk of stock A as measured by its variance is 3.2 times that of stock B.If the two stocks are combined equally in a portfolio,what would be the portfolio's expected return?

• A)11.50%
• B)9)50%
• C)12.00%
• D)8)25%
• E)14.10%

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