For the Following Three Questions, Assume That $\bar { R } _ { m } = 15 \%$

question 27

Multiple Choice

For the following three questions, assume that: $\bar { R } _ { m } = 15 \%$ , $\bar { R } _ { A } = 13 \%$ , $R _ { F } = 5 \%$ , $\sigma _ { m } = 16 \%$ , the market portfolio is a tangency portfolio, and that A is an efficient portfolio on the Capital Market Line.
-What would be the expected return and standard deviation of a portfolio with equal proportions invested in Treasury bills and the market portfolio?

• A) 7.5%, 8%
• B) 10%, 8%
• C) 10%, 16%
• D) 25%, 32%

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Definitions:

GAAP

Generally Accepted Accounting Principles, a collection of standardized guidelines and practices for financial accounting in the United States to ensure consistency and transparency.

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Adjustments made to financial statements or other data for previous periods in light of new information or to correct errors.

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Adjustments made to eliminate transactions between entities within a consolidated group, ensuring that the consolidated financial statements present a group as a single economic entity.