Consider Two Perfectly Negatively Correlated Risky Securities a and B

question 29

Multiple Choice

Consider two perfectly negatively correlated risky securities A and B A has an expected rate of return of 10% and a standard deviation of 16%. B has an expected rate of return of 8% and a standard deviation of 12%.
The risk-free portfolio that can be formed with the two securities will earn a(n) _____ rate of return.

• A) 8.5%
• B) 9.0%
• C) 8.9%
• D) 9.9%

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