Use the Following Information to Answer the Question(s)below

question 26

Multiple Choice

Use the following information to answer the question(s) below.
Your investment portfolio consists of $10,000 worth of Google stock.Suppose that the risk-free rate is 4%,Google stock has an expected return of 14% and a volatility of 35%,and the market portfolio has an expected return of 12% and a volatility of 18%.Assume that the CAPM assumptions hold.
-The volatility of the alternative investment that has the lowest possible volatility while having the same expected return as Google is closest to:

• A)18.0%.
• B)22.5%.
• C)23.4%.
• D)35.0%.

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Definitions:

Price Level

The average of current prices across the entire spectrum of goods and services produced in the economy, an indicator of inflation or deflation.

Output Produced

The total quantity of goods and services produced by an economic system during a given period.

Classical Theory

An economic theory advocating for free markets, minimal governmental intervention, and the belief that markets are self-regulating.

Loanable Funds Market

A theoretical market where borrowers and lenders interact, determining the market interest rate based on the supply and demand for loanable funds.