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

question 18

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 10% and a volatility of 18%. Assume that the CAPM assumptions hold.
-The expected return on the alternative investment having the highest possible expected return while having the same volatility as Google is closest to?

• A) 21.6%
• B) 22.5%
• C) 23.4%
• D) 35.0%

---

Definitions:

Inverse Demand Function

A mathematical relationship expressing the price of a good or service as a function of the quantity demanded, implying how prices vary with changes in quantity demanded.

Inverse Supply

A concept in economics where the supply curve is expressed as a function of price rather than quantity supplied.

Tax

A compulsory financial charge or levy imposed by a government on individuals or entities to fund government spending and various public expenditures.

Supply Curve

A graphical representation of the relationship between the price of a good and the quantity of the good supplied.