Use the Information for the Question(s)below

question 113

Multiple Choice

Use the information for the question(s) below.
You are presently invested in the Luther Fund,a broad based mutual fund that invests in stocks and other securities.The Luther Fund has an expected return of 14% and a volatility of 20%.Risk-free Treasury bills are currently offering returns of 4%.You are considering adding a precious metals fund to your current portfolio.The metals fund has an expected return of 10%,a volatility of 30%,and a correlation of -.20 with the Luther Fund.
-The expected return on the precious metals fund is closest to:

• A)-3%
• B)4%
• C)1%
• D)10%

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Definitions:

Income Summary

An account to which the revenue and expense accounts are transferred at the end of a period to summarize the results of operations.

Year

A period of time consisting of 365 days (366 in a leap year), used as a basic unit of time for most calendar systems to measure durations and segment accounting periods.

Adjusted Trial Balance

A list of all accounts and their balances after adjusting entries are made, used for preparing financial statements.

Statement of Financial Position

Another term for a balance sheet, detailing a company's assets, liabilities, and equity at a specific point in time.