Use the Information for the Question(s)below

question 34

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 amount that Tom should invest in the market portfolio to minimize his volatility is closest to:

• A)100%
• B)90%
• C)125%
• D)110%

---

Definitions:

Reverse Order

A method or process that involves performing operations, sequences, or activities in the opposite direction from the usual or established arrangement.

Priority Rule

A principle or guideline used to determine the order in which tasks, projects, or customers are addressed based on their importance or urgency.

Service Systems

Configurations of technology, processes, people, and other resources that provide services to customers.

Process-Oriented Facilities

Facilities designed to manage and improve the processes involved in production or service delivery, focusing on workflow and efficiency.