Suppose Sarah Can Borrow and Lend at the Risk Free-Rate

question 49

Multiple Choice

Suppose Sarah can borrow and lend at the risk free-rate of 3%.Which of the following four risky portfolios should she hold in combination with a position in the risk-free asset?

• A) portfolio with a standard deviation of 15% and an expected return of 12%
• B) portfolio with a standard deviation of 19% and an expected return of 15%
• C) portfolio with a standard deviation of 25% and an expected return of 18%
• D) portfolio with a standard deviation of 12% and an expected return of 9%

Comprehend the mechanics of futures contracts and calculate profit or loss from futures trading.

Understand the regulatory framework and insurance for financial instruments.

Recognize the importance and role of key financial rates and benchmarks in global finance.

Distinguish between different global stock market indices and their geographical relevance.

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Definitions:

Probability

A numeric expression, between 0 and 1, indicating the probability of an event's occurrence.

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Attempts to score points from the free-throw line following a foul in basketball games.

Probability

A mathematical concept that quantifies the chance that a given event will happen.

Basketball Player

An individual who participates in the sport of basketball, either professionally or as an amateur.