You Invest $100 in a Risky Asset with an Expected

question 46

Multiple Choice

You invest $100 in a risky asset with an expected rate of return of 0.11 and a standard deviation of 0.21 and a T-bill with a rate of return of 0.045.
-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 0.08?

• A)301% and 69.9%
• B)50.5% and 49.50%
• C)60.0% and 40.0%
• D)61.9% and 38.1%
• E)cannot be determined

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Definitions:

Triplet

A term in quantum mechanics referring to a system (often an electron) that exists in three possible states with the same energy, typically in the context of spin states.

NMR

Nuclear Magnetic Resonance, a technique that exploits the magnetic properties of certain atomic nuclei to determine physical and chemical properties of atoms or the molecules in which they are contained.

Quartet

In nuclear magnetic resonance (NMR) spectroscopy, a signal pattern of four peaks that suggests the presence of three equivalent protons adjacent to the observed nucleus.

Singlet

A term used in spectroscopy to describe an energy state of an atom or molecule where all electron spins are paired, resulting in zero net magnetic spin.