You Invest $100 in a Risky Asset with an Expected

question 38

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.

---

Definitions:

New Buy

A purchasing situation in which a business customer is buying a product or service for the first time, requiring extensive decision-making and research.

IBM

International Business Machines Corporation, a multinational technology and consulting company known for its computer hardware, software, and IT services.

B2B Marketing

The marketing of goods and services directly to other businesses or organizations rather than to individual consumers.

Derived Demand

The demand for a product or service that arises due to the demand for another product or service it helps to produce.