A Portfolio Consists of One Risky Asset and One Risk-Free

question 60

Multiple Choice

A portfolio consists of one risky asset and one risk-free asset.The risky asset has an expected return of 11.2 percent and a beta of 1.39.The risk-free asset has an expected return of 3.4 percent.How much of the portfolio is invested in the risk-free asset if the portfolio beta is 1.07?

• A) 16 percent
• B) 23 percent
• C) 32 percent
• D) 45 percent
• E) 54 percent

---

Definitions:

Simplistic

Describes something that is overly simplified, lacking in complexity or nuance.

Loaded

Often relates to questions or statements designed to elicit emotional responses or contain an implicit assumption.

Yea-Saying

The tendency of respondents to agree with statements or questions regardless of their actual opinion, often leading to bias in survey responses.

Loaded

A term used to describe questions or statements that are designed to elicit emotional responses or include assumptions, potentially biasing the response.