You Invest $100 in a Risky Asset with an Expected

question 20

Multiple Choice

You invest $100 in a risky asset with an expected rate of return of 0.12 and a standard deviation of 0.15 and a T-bill with a rate of return of 0.05.
-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 0.06?

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

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Definitions:

MPP

"MPP" is typically understood as "Marginal Physical Product," which refers to the additional output resulting from the use of one more unit of a variable input, holding all other inputs constant.

MRP

Material Requirements Planning (MRP) is a system for planning production, scheduling activities, and controlling inventory used in overseeing manufacturing operations.

MPP

Marginal Physical Product, the additional output resulting from the use of one more unit of a variable input, holding all other inputs constant.

MRP

Marginal Revenue Product; the additional revenue generated from employing one more unit of a resource or factor of production.