An Investor Can Design a Risky Portfolio Based on Two

question 36

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 expected return on the optimal risky portfolio is ________.

• A)14.0%
• B)15.6%
• C)16.4%
• D)18.0%

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Definitions:

Compliance Principle

A psychological concept where individuals change their behavior due to explicit or implicit pressure from others, often to align with societal or group norms.

Donation

The act of giving something, often money or goods, to help a person, group, or organization.

Resisting Authority

The act of opposing or defying the instructions or control exerted by those in positions of power or command.

Authority Figure's Expectations

The anticipated standards or demands set by an individual in a position of power or influence, which can significantly impact others' behavior and choices.