Consider the Following Portfolio of Assets What Is the Expected Return on the Portfolio (Round to |

question 14

Multiple Choice

Consider the following portfolio of assets: $$\begin{array} { | c | c | c | c | c | c | } \hline \text { Loan } i & \text { Weight } i & \text { Expected return } i & \sigma i & \sigma i ^ { 2 } & \\\hline 1 & 0.30 & 13 \% & 9.06 \% & 82.0 \% & \mathrm { P } _ { 12 } = - 0.87 \\\hline 2 & 0.70 & 11 \% & 8.72 \% & 76.0 \% & \sigma _ { 12 } = - 75.0 \% \\\hline\end{array}$$ What is the expected return on the portfolio (round to two decimals) ?

• A)0.3(13%) + 0.7(11%) = 11.60%
• B)(13% + 11%) / 2 = 12.00%
• C)(0.3)²(13%) + (0.7)²(11%) = 6.56%
• D)[(0.3)²(13%) + (0.7)²(11%)] * 2 = 13.12%

---

Definitions:

Pocket Veto

A legislative maneuver that allows a president or governor to indirectly veto a bill by retaining it unsigned until it is too late for it to be dealt with during the legislative session.

Congress Adjourns

The formal conclusion or suspension of a legislative session, after which members of Congress leave to return at a later date or for the end of the session.

Veto Message

A statement issued by the president of the United States when vetoing a piece of legislation, outlining his reasons for doing so.

Electoral College

A body of electors established by the United States Constitution, which formally selects the President and Vice President based on the popular vote in each state.