You Invest $100 in a Risky Asset with an Expected

question 49

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 risk-free asset and the risky asset, respectively, to form a portfolio with a standard deviation of 0.08?

• A) 30.1% and 69.9%
• B) 50.5% and 49.50%
• C) 60.0% and 40.0%
• D) 61.9% and 38.1%
• E) Cannot be determined.

---

Definitions:

Depressed

A state of low mood and aversion to activity that can affect a person's thoughts, behavior, feelings, and sense of well-being.

Guaranteed

A promise or assurance, typically in writing, that certain conditions will be fulfilled or that a product will meet a specified level of quality.

Depressive Episodes

Periods characterized by severe feelings of sadness, hopelessness, and a lack of interest or pleasure in activities.

Depressed Children

Refers to children suffering from depression, a mental health disorder characterized by persistent sadness and a lack of interest.