Stock K Is Expected to Return 12

question 88

Multiple Choice

Stock K is expected to return 12.4 percent while the return on Stock L is expected to be 8.6 percent.You have $10,000 to invest in these two stocks.How much should you invest in Stock L if you desire a combined return from the two stocks of 11 percent?

• A)$3,511
• B)$4,209
• C)$3,684
• D)$2,907
• E)$3,415

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Definitions:

Delta

In finance, delta refers to the ratio that compares the change in the price of an asset, usually a derivative, to the corresponding change in the price of its underlying asset.

Risky Investment

An investment that carries a higher probability of losing money, alongside the possibility of yielding high returns.

Risk-free Investment

An investment that is considered to have no risk of financial loss, often represented by government bonds in stable countries.