Use the Information for the Question(s)below

question 2

Multiple Choice

Use the information for the question(s) below.
Tom's portfolio consists solely of an investment in Merck stock.Merck has an expected return of 13% and a volatility of 25%.The market portfolio has an expected return of 12% and a volatility of 18%.The risk-free rate is 4%.Assume that the CAPM assumptions hold in the market.
-Assuming that Tom wants to maintain the current expected return on his portfolio,then the minimum volatility that Tom could achieve by investing in the market portfolio and risk-free investment is closest to:

• A)20%.
• B)25%.
• C)22%.
• D)18%.

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Definitions:

Adolescence

The transitional stage of development from childhood to adulthood, characterized by physical, psychological, and social changes.

Infancy

The period in human development extending from birth to 12 months old, characterized by rapid physical and cognitive growth.

Subconscious Inner Forces

Mental processes and emotions not fully aware to the conscious mind that influence behavior and thoughts.

Psychodynamic Perspective

A psychological approach that emphasizes systematic study of the psychological forces that underlie human behavior, feelings, and emotions and how they might relate to early experience.