Your Client, Bo Regard, Holds a Complete Portfolio That Consists

question 47

Multiple Choice

Your client, Bo Regard, holds a complete portfolio that consists of a portfolio of risky assets (P) and T-Bills. The information below refers to these assets. $$\begin{array} { l l } \mathrm { E } \left( \mathrm { R } _ { \mathrm { p } } \right) & 12.00 \% \\\text { Standard Deviation of P } & 7.20 \% \\\text { T-Bill rate } & 3.60 \% \\& \\\text { Proportion of Complete Portfolio in P } & 80 \% \\\text { Proportion of Complete Portfolio in T-Bills } & 20 \% \\& \\\text { Composition of P: } & \\\text { Stock A } & 40.00 \% \\\text { Stock B } & 25.00 \% \\\text { Stock C } & 35.00 \% \\\hline\text { Total } & \underline { 100.00 \% } \\\hline\end{array}$$
-What is the equation of Bo's Capital Allocation Line?

• A)E(r_C) = 7.2 + 3.6 * Standard Deviation of C
• B)E(r_C) = 3.6 + 1.167 * Standard Deviation of C
• C)E(r_C) = 3.6 + 12.0 * Standard Deviation of C
• D)E(r_C) = 0.2 + 1.167 * Standard Deviation of C
• E)E(r_C)= 3.6 + 0.857 * Standard Deviation of C

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Definitions:

Supplier

An entity that provides goods or services to another company, often part of the supply chain or procurement process.

Customer

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Congeneric Mergers

Mergers between companies in the same industry but do not offer the same products or services, aiming to diversify their product lines or extend their market reach.

Anticompetitive Effects

Negative impacts on market competition, such as reduced consumer choice or higher prices, often resulting from monopolistic practices or mergers.