Use the Table for the Question(s) Below

question 15

Multiple Choice

Use the table for the question(s) below.
Consider the following covariances between securities:

-Suppose you have $10,000 in cash to invest. You decide to sell short $5,000 worth of Kinston stock and invest the proceeds from your short sale, plus your $10,000 into one-year U.S. treasury bills earning 5%. At the end of the year, you decide to liquidate your portfolio. Kinston Industries has the following realized returns: The return on your portfolio is closest to:

• A) -0.5%
• B) 13.5%
• C) -2.5%
• D) 14.5%

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