Both Assets B and C Plot on the SML

question 26

Multiple Choice

Both assets B and C plot on the SML.Asset B has a beta of 1.5 and an expected return of 13.1%.Asset C has a beta of 0.60 and an expected return of 7.50%.The risk-free rate is 4% and the expected return on the market portfolio is 11%.If you wish to hold a portfolio consisting of assets B and C,and have a portfolio beta equal to 1.1,what proportion of the portfolio must be in asset C?

• A)0.375
• B)0.444
• C)0.625
• D)0.75

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Definitions:

Measurable Objectives

Specific, quantifiable, achievable targets set by an organization to track progress towards its goals.

Financial Budgets

A plan that outlines an organization's revenue, expenses, and capital expenditures over a specified period, guiding its business operations and financial decisions.

Dependent Variable

In research, the variable that is being tested and measured, which is expected to change due to different conditions.

Independent Variables

Independent variables are factors that are manipulated or changed in an experiment to observe their effect on dependent variables.