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%

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Definitions:

ATMs

Automated Teller Machines, electronic banking outlets that allow people to complete transactions without the need for a branch representative.

Frito-Lay

An American subsidiary of PepsiCo that manufactures and markets snack foods such as chips.

Harley Davidson

An American motorcycle manufacturer known for its heavyweight motorcycles designed for cruising on highways.