You Invest $100 in a Risky Asset with an Expected

question 16

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. The slope of the capital allocation line formed with the risky asset and the risk-free asset is equal to

• A) 0.4667.
• B) 0.8000.
• C) 2.14.
• D) 0.41667.
• E) Cannot be determined.

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