Min Has $5,000 to Invest

question 60

Multiple Choice

Min has $5,000 to invest.The expected return on the market portfolio is 11 percent with a standard deviation of 15 percent.What are the expected return and standard deviation for the portfolio if she borrowed $2,000 at the risk-free rate of 4 percent to invest in the market portfolio?

• A) Expected return = 19.40%; standard deviation = 15.40%
• B) Expected return = 15.40%; standard deviation = 19.40%
• C) Expected return = 13.80%; standard deviation = 21.00%
• D) Expected return = 21.00%; standard deviation = 13.80%

---

Definitions:

Introspection

The examination of one's own conscious thoughts and feelings, used as a method of self-reflection and in psychological studies.

Gestalt Psychology

A theory of mind and brain proposing that the operational principle of the brain is holistic, parallel, and analog, with self-organizing tendencies, or that the whole is different from the sum of its parts.

James

Refers to William James, an American philosopher and psychologist who is often referred to as the "Father of American psychology".

Ancient Greeks

The Ancient Greeks were people belonging to the Greek civilization during a period from the Dark Ages about 1200 BCE to the end of antiquity (c. 600 AD). This era was marked by significant developments in art, philosophy, science, and politics.