Consider a Treasury Bill with a Rate of Return of 5

question 8

Multiple Choice

Consider a treasury bill with a rate of return of 5% and the following risky securities:
Security A: E(r) = .15; variance = .0400
Security B: E(r) = .10; variance = .0225
Security C: E(r) = .12; variance = .1000
Security D: E(r) = .13; variance = .0625
The investor must develop a complete portfolio by combining the risk-free asset with one of the securities mentioned above.The security the investor should choose as part of his complete portfolio to achieve the best CAL would be _________.

• A) security A
• B) security B
• C) security C
• D) security D

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Definitions:

Older Men

Refers to males of an advanced age, often implying increased wisdom, experience, or social status.

Physical Attractiveness

The degree to which a person’s physical traits are considered aesthetically pleasing or beautiful by others.

Increasing in Strength

Becoming stronger or more forceful in capacity or intensity over time.

Looking Much Younger

The perception or reality of an individual appearing significantly younger than their actual chronological age.