Portfolio a Has Expected Return of 10% and Standard Deviation

question 47

Multiple Choice

Portfolio A has expected return of 10% and standard deviation of 19%.Portfolio B has expected return of 12% and standard deviation of 17%.Rational investors will

• A)borrow at the risk-free rate and buy A.
• B)sell A short and buy B.
• C)sell B short and buy A.
• D)borrow at the risk-free rate and buy B.
• E)lend at the risk-free rate and buy B.

---

Definitions:

Stress Reaction

The physiological and psychological response of an individual to perceived challenges or threats in their environment.

Event

An occurrence or happening, often significant, that impacts or involves a particular group or environment.

Integrity

The characteristic of being truthful and upholding high ethical standards, or the condition of being unified and intact.

Erikson

Refers to Erik Erikson, a developmental psychologist and psychoanalyst known for his theory on the psychosocial development of human beings.