An Investor Can Design a Risky Portfolio Based on Two

question 48

Multiple Choice

An investor can design a risky portfolio based on two shares, A and B. Share A has an expected return of 18% and a standard deviation of return of 20%. Share B has an expected return of 14% and a standard deviation of return of 5%. The correlation coefficient between the returns of A and B is 0.50. The risk-free rate of return is 10%. The proportion of the optimal risky portfolio that should be invested in Share A is ________.

• A)0%
• B)40%
• C)60%
• D)100%

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Definitions:

Tall Hierarchies

Organizational structures with multiple levels of management and authority, sometimes leading to slower decision-making processes.

Employee Empowerment

Practices that give employees more autonomy, responsibility, and authority over their work, aiming to increase engagement and productivity.

Centralized Structures

Organizational designs where decision-making authority is consolidated at the top levels of management, leading to a hierarchy of control and limited autonomy lower down.

Decentralized

Refers to the distribution of decision-making powers away from a central authority, allowing for greater input and autonomy at the local or divisional levels.