Using the Formula for the Capital Market Line (Formula 21-5)

question 9

Multiple Choice

Using the formula for the capital market line (Formula 21-5) , if the risk-free rate (R_F) is 6%, the market rate of return (K_M) is 12%, the market standard deviation (σ_M) is 11%, and the standard deviation of the portfolio (σ_P) is 14%, compute the anticipated return of the portfolio (K_P) .

• A)20.4%
• B)16.33%
• C)13.64%
• D)13.4%
• E)13.2%

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