You Invest $100 in a Risky Asset with an Expected

question 5

Multiple Choice

You invest $100 in a risky asset with an expected rate of return of 0.11 and a standard deviation of 0.21 and a T-bill with a rate of return of 0.045. 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 0.13?

• A) 130.77% and −30.77%
• B) −30.77% and 130.77%
• C) 67.67% and 33.33%
• D) 57.75% and 42.25%
• E) Cannot be determined.

Understand gender differences in life expectancy.

Identify major milestones and turning points in adult life.

Understand the principles and importance of control groups in experimental research.

Recognize ethical considerations in psychological research, including informed consent and privacy.

---

Definitions:

Floor

In finance, the lowest possible value or limit for prices, wages, or other financial variables.

Personal Casualty Loss

Financial loss resulting from the damage, destruction, or loss of an individual’s property from sudden, unexpected, or unusual events.

Deduction

An amount that can be subtracted from gross income to reduce the total taxable income, leading to lower tax liability.

Federally Declared Disaster Area

An area officially designated by the Federal Emergency Management Agency (FEMA) where significant damage has occurred due to natural or man-made disasters, making it eligible for federal aid.