You Invest $1000 in a Risky Asset with an Expected

question 43

Multiple Choice

You invest $1000 in a risky asset with an expected rate of return of 0.17 and a standard deviation of 0.40 and a T-bill with a rate of return of 0.04.
-What percentages of your money must be invested in the risk-free asset and the risky asset,respectively,to form a portfolio with a standard deviation of 0.20?

• A)30% and 70%
• B)50% and 50%
• C)60% and 40%
• D)40% and 60%
• E)Cannot be determined.

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