Asset 1 Has an Expected Return of 10% and a Standard

question 83

Multiple Choice

Asset 1 has an expected return of 10% and a standard deviation of 20%.Asset 2 has an expected return of 15% and a standard deviation of 30%.The correlation between the two assets is less than 1.0.You form a portfolio by investing half of your money in asset 1 and half in asset 2.Which of the following best describes the expected return and standard deviation of your portfolio?

• A)The expected return is 12.5% and the standard deviation is less than 25%.
• B)The expected return is between 10% and 15% and the standard deviation is greater than 30%.
• C)The expected return is 12.5% and the standard deviation is 25%.
• D)The expected return is 12.5% and the standard deviation is greater than 25%.

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