Suppose You Have $5,000 to Invest in a Risk-Free Asset

question 103

Multiple Choice

Suppose you have $5,000 to invest in a risk-free asset and the market portfolio.The expected return on the market portfolio is 13.5 percent with a standard deviation of 18 percent.The risk-free rate is 4.25 percent.How much of your funds should be in the risk-free asset if the portfolio has an expected return of 10 percent?

• A) $1,892
• B) $2,091
• C) $2,909
• D) $3,108

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