What Is the Expected Return on This Portfolio

question 61

Multiple Choice

What is the expected return on this portfolio?

• A)11.48 percent
• B)11.92 percent
• C)13.03 percent
• D)13.42 percent
• E)13.97 percent

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Definitions:

Treasury Bill

A short-term government security issued at a discount from the face value and matures at par, providing a return to the holder at maturity.

Dealer

An individual or firm in the securities business who buys and sells securities for their own account, rather than for customers, thus acting as a principal in the transactions.

Money Market Instrument

Short-term debt instruments, typically with maturities of less than one year, traded in the money market, including treasury bills, commercial paper, and certificates of deposit.

Maturity

The expiration date of a financial instrument, at which point the principal is to be paid back to investors.