You Invest $100 in a Risky Asset with an Expected

question 55

Multiple Choice

You invest $100 in a risky asset with an expected rate of return of 0.12 and a standard deviation of 0.15 and a T-bill with a rate of return of 0.05. What percentages of your money must be invested in the risky asset and the risk-free asset, respectively, to form a portfolio with an expected return of 0.09?

• A) 85% and 15%
• B) 75% and 25%
• C) 67% and 33%
• D) 57% and 43%
• E) Cannot be determined.

---

Definitions:

Episodic Memory

The ability to recall and mentally re-experience specific episodes from one's personal past.

Semantic Memory

A kind of enduring memory that enables the recollection of words, ideas, or digits, crucial for language utilization and comprehension.

Schemas

Cognitive frameworks or concepts that help individuals organize and interpret information in the world around them.

Fragmented Memories

Incomplete or disjointed memories that may not form a coherent or detailed recollection of events.