A Portfolio Consists of Two Securities: a Risk-Free Asset and an Equity

question 87

Multiple Choice

A portfolio consists of two securities: a risk-free asset and an equity security.The expected return on the risk-free asset is 4.25 percent.The expected return of the equity security is 16 percent with a standard deviation of 22 percent.What is the portfolio standard deviation if the expected return for the portfolio is 12 percent?

• A) 6.99%
• B) 7.49%
• C) 10.55%
• D) 14.51%

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Definitions:

External Stressors

Factors or conditions in one’s physical or social environment that cause stress, such as workload, family issues, or environmental changes.

Chronic Stress

A constant state of stress experienced over a prolonged period of time, which can adversely affect one's physical and mental health.

Immune System

The complex network of cells, tissues, and organs that protect the body against infection and disease.

Immune System

A complex network of cells, tissues, and organs that work together to defend the body against attacks by foreign invaders, such as viruses and bacteria.