An Investor Invests 60 Percent of His Wealth in a Risky

question 35

Multiple Choice

An investor invests 60 percent of his wealth in a risky asset with an expected rate of return of 0.14 and a variance of 0.32 and 40 percent in a T-bill that pays 3 percent.His portfolio's expected return and standard deviation are __________ and __________,respectively.

• A) 0.096;0.339
• B) 0.087;0.267
• C) 0.295;0.123
• D) 0.087;0.182
• E) none of these

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Definitions:

Normality Requirement

The assumption that the data or the residuals in a statistical model are normally distributed.

Parametric Test

A category of hypothesis tests that assumes underlying statistical distributions in the data and usually involves parameters such as the mean or variance.

Wilcoxon Rank-sum Test

A nonparametric statistical test used to compare two independent samples, based on the ranks of their values, to determine if there are significant differences between them.

Ordered Array

A sequence of elements arranged in ascending or descending order, often used in computer programming for sorting and searching algorithms.