A Portfolio Consists 20% of a Risk-Free Asset and 80

question 53

Multiple Choice

A portfolio consists 20% of a risk-free asset and 80% of a stock.The risk-free return is 4%.The stock has an expected return of 15% and a standard deviation of 30%.What's the expected return

• A) 12.8%
• B) 9.5%
• C) 15.0%
• D) 4.0%

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Definitions:

Government

The organization that is the governing authority of a political unit, responsible for creating and enforcing laws and managing public resources and services.

Investment Banks

Financial institutions that assist individuals, corporations, and governments in raising financial capital by underwriting or acting as the client's agent in the issuance of securities.

Bonus Structures

The design of additional compensation methods to employees, typically based on performance criteria.

Mortgage-Backed Securities

Financial instruments that are secured by mortgages, with payments derived from the underlying loans.