You Invest $100 in a Risky Asset with an Expected

question 11

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 risky asset and the risk-free asset, respectively, to
Form a portfolio with an expected return of 0.13?

• A) 130.77% and -30.77%
• B) -30.77% and 130.77%
• C) 67.67% and 33.33%
• D) 57.75% and 42.25%
• E) Cannot be determined.

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Definitions:

Angle of Repose

The steepest angle at which loose material, like sand or gravel, can be piled without slumping, determined by the frictional contact between the particles.

Orientation of Fractures

describes the spatial alignment or direction of cracks or breaks in geological formations.

Water

Water is a chemical compound, H2O, vital for all known forms of life, existing in three phases (solid, liquid, gas), and plays a crucial role in the Earth's climate and weather.

Prefix

A word, letter, or number placed before another to alter its meaning or create a new term.