Calculate the Return on an Optimal Portfolio Where the Return $2 \%$

question 36

Multiple Choice

Calculate the return on an optimal portfolio where the return on the risky asset is 5%,the return on the risk-free asset is 4%,and where the investor invests has a weight of 75% in the risky asset.

• A) \( 2 \% \)
• B) \( 3.50 \% \)
• C) \( 4.75 \% \)
• D) \( 5.25 \% \)

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Definitions:

Stock Split

A corporate action that increases the number of a company's outstanding shares by dividing each share, which in turn reduces the price per share, making the stock more accessible to investors.

Basic Earnings Per Share

A measure of a company's profitability that shows how much of its profits are allocated to each share of common stock.

Stock Split

A corporate action in which a company divides its existing shares into multiple shares to boost the liquidity of the shares, though the market capitalization remains unchanged.

Basic Earnings Per Share

A calculation that measures the profitability available to a company's common shareholders, dividing net income by the number of common shares outstanding.