An Investor Can Design a Risky Portfolio Based on Two

question 5

Multiple Choice

An investor can design a risky portfolio based on two stocks, A and B. Stock A has an expected return of 21% and a standard deviation of return of 39%. Stock B has an expected return of 14% and a standard deviation of return of 20%. The correlation coefficient between the returns of A and B is 0.4. The risk-free rate of return is 5%.
-The proportion of the optimal risky portfolio that should be invested in stock B is approximately _________.

• A) 29%
• B) 44%
• C) 56%
• D) 71%

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Definitions:

Utilitarianism

A principle stating that the best action is the one that maximizes utility, generally defined as that which produces the greatest well-being of the greatest number of people.

Nurse Manager

A registered nurse who is responsible for overseeing the nursing staff and managing the operational aspects of a healthcare facility or specific unit.

MORAL Model

The MORAL model is a framework used in decision-making processes, often in ethical dilemmas, to ensure structured and principled reasoning.

DNAR (AND) Prescription

A medical order (Do Not Attempt Resuscitation) indicating that no resuscitative measures should be taken in the event of a patient's cardiac or respiratory arrest.