Your Client, Bo Regard, Holds a Complete Portfolio That Consists

question 37

Multiple Choice

Your client, Bo Regard, holds a complete portfolio that consists of a portfolio of risky assets (P) and T-Bills.The information below refers to these assets. What is the equation of Bo's capital allocation line

• A)E(r_C) = 7.2 + 3.6 × Standard Deviation of C
• B)E(r_C) = 3.6 + 1.167 × Standard Deviation of C
• C)E(r_C) = 3.6 + 12.0 × Standard Deviation of C
• D)E(r_C) = 0.2 + 1.167 × Standard Deviation of C
• E)E(r_C) = 3.6 + 0.857 × Standard Deviation of C

---

Definitions:

Irrational Thinking

Irrational thinking involves patterns of thought that are unrealistic, biased, or based on incorrect assumptions, often leading to negative emotional outcomes or flawed decision-making.

Hallucinations

Perceptions or sensations experienced without an external source, often auditory or visual, and common in certain psychological disorders.

Disturbed Emotion

Emotional states that are intensely negative, disordered, or out of the ordinary, affecting a person's well-being and functioning.

Poor Reality Contact

A term indicating difficulty in distinguishing external reality from internal thoughts and fantasies, often seen in severe mental illnesses.