Treasury Bills Are Paying a 4% Rate of Return

question 82

Multiple Choice

Treasury bills are paying a 4% rate of return.A risk averse investor with a risk aversion of A = 3 should invest in a risky portfolio with a standard deviation of 24% only if the risky portfolio's expected return is at least ______.

• A) 8.67%
• B) 9.84%
• C) 12.64%
• D) 14.68%

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Definitions:

Merchandise Purchases Budget

A financial plan that estimates the cost of goods a company needs to purchase to meet its sales goals.

Cash Budget

A financial plan that estimates cash inflows and outflows over a specific period of time, primarily used to assess whether a company has sufficient cash to fulfill its operations and financial commitments.

Manufacturing Overhead Budget

A detailed plan that estimates the expected manufacturing overhead costs for a specific period, assisting in financial planning.

Variable Overhead Rate

The rate at which variable overhead costs are applied to the production process, typically based on a cost driver.