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

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Definitions:

Vagus Nerve

A cranial nerve that extends from the brainstem to the abdomen, influencing heart rate, digestion, and mood regulation.

Stretching

The process of gently elongating muscles and tendons to increase flexibility and reduce the risk of injury.

Stomach Wall

The layers of tissue that form the structure of the stomach, including the mucosa, submucosa, muscularis externa, and serosa.

Adaptive Value

The degree to which a trait or behavior enhances an organism's chances of survival and reproduction in its environment.