Use the Following Information to Answer the Question(s)below

question 17

Multiple Choice

Use the following information to answer the question(s) below.
Your investment portfolio consists of $10,000 worth of Google stock.Suppose that the risk-free rate is 4%,Google stock has an expected return of 14% and a volatility of 35%,and the market portfolio has an expected return of 12% and a volatility of 18%.Assume that the CAPM assumptions hold.
-What alternative investment has the lowest possible volatility while having the same expected return as Google?

• A)-25% in the risk-free asset and +125% in the market portfolio
• B)-20% in the risk-free asset and +120% in the market portfolio
• C)0% in the risk-free asset and +100% in the market portfolio
• D)20% in the risk-free asset and +80% in the market portfolio

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Definitions:

Mountains

Elevated portions of the Earth's surface, usually forming ranges or peaks, created by tectonic forces or volcanism.

Sand

Fine grains of minerals or rock fragments, often found on beaches and deserts, formed due to weathering and erosion of rocks.

Sediments

Particles of rock, mineral, or organic materials that are transported by wind, water, or ice and deposited on the surface of the Earth.

Braided River

A type of river characterized by a network of river channels separated by small, often temporary, islands known as eyots or aits.