Stu Has Decided to Invest $6,800 in a Risky Asset

question 73

Multiple Choice

Stu has decided to invest $6,800 in a risky asset that has an expected return of 11.3 percent and a standard deviation of 21.2 percent.He will also invest $3,200 in a risk-free asset with an expected return of 4.2 percent.The market risk premium is 7.1 percent.What is the standard deviation of his portfolio?

• A)3.30 percent
• B)11.94 percent
• C)6.87 percent
• D)9.25 percent
• E)14.42 percent

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Definitions:

Government Regulation

The imposition of rules and directives by government agencies designed to control and direct the behavior of individuals, businesses, and other entities in the public interest.

Design Defect

A flaw or error in the design of a product that makes it dangerous or ineffective, potentially leading to consumer harm or product failure.

Product Liability

refers to the legal obligation of manufacturers, suppliers, or sellers to compensate for injuries or damages caused by defective or unsafe products.

Product Misuse

Using a product in a way not intended by the manufacturer, which can lead to damage or injury.