An Investor Can Design a Risky Portfolio Based on Two

question 54

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 standard deviation of return on the optimal risky portfolio is ________.

• A)0%
• B)5%
• C)7%
• D)20%

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Definitions:

Electric Motor Starters

Devices used to control the initial surge of current when an electric motor is started, protecting the motor from damage due to high currents.

Commercial

Pertaining to business activities, transactions, or establishments primarily focused on profitability.

Necessary Control

Essential mechanisms or systems required to regulate the operation of machines, processes, or systems to achieve desired outcomes.

Protection Components

Devices or systems designed to protect electrical circuits or equipment from damage due to overcurrent, overvoltage, or other electrical faults.