You Invest $1,000 in a Risky Asset with an Expected

question 51

Multiple Choice

You invest $1,000 in a risky asset with an expected rate of return of 0.17 and a standard deviation of 0.40 and a T-bill with a rate of return of 0.04. The slope of the capital allocation line formed with the risky asset and the risk-free asset is equal to

• A) 0.325.
• B) 0.675.
• C) 0.912.
• D) 0.407.
• E) Cannot be determined.

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