For Questions 1-3 Use the Information from the Following Table

question 11

Essay

For questions 1-3 use the information from the following table
$\begin{array} { l c c l } \text { Security } & \text { Return } & \text { Standard Deviation } & \text { Beta } \\\text { A } & 16 \% & 20 \% & 1.2 \\\text { B } & 12 \% & 25 \% & 0.8 \\\text { Risk-free asset } & 4 \% & 2 ? ? & \text { ??? }\end{array}$
-What is the value of systematic risk for a portfolio with 2/3 of
the funds invested in A and 1/3 of the funds invested in B?

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Definitions:

Treasury Bills

Treasury bills are short-term government securities with maturities ranging from a few days to 52 weeks, issued at a discount to face value.

Maturity Risk

The danger that an investment’s value will change due to a change in the absolute level of interest rates, typically affecting fixed-income securities as they approach maturity.

Marketable Securities Portfolio

A collection of liquid securities that a company holds, which can easily be converted into cash.

Commercial Paper

An unsecured, short-term debt instrument issued by corporations.