An Investor Constructs a Portfolio with a 75 Percent Allocation

question 73

Multiple Choice

An investor constructs a portfolio with a 75 percent allocation to a stock index and a 25 percent allocation to a risk-free asset. The expected returns on the risk-free asset and the stock index are 3 percent and 10 percent, respectively. The standard deviation of returns on the stock index is 14 percent. Calculate the expected standard deviation of the portfolio.

• A) 7.5 percent
• B) 9.0 percent
• C) 10.5 percent
• D) 11.5 percent
• E) 13.0 percent

Understand the basis and impact of economists' and environmentalists' opinions on environmental issues.

Identify and differentiate between point and nonpoint sources of pollution.

Recognize factors determining the damage produced by pollutants.

Explain the concept of the tragedy of the commons and its impact on the environment.

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Definitions:

After-Tax Dollar Value

The net value of an investment or income after all applicable taxes have been subtracted.

Tax Rate

The percentage at which an individual or corporation is taxed by the government on income or profits.

Dividends Received

Income payments received by shareholders from their investments in the form of dividends from corporations.

Investment Account

An account that holds securities, shares, or bonds for investment purposes.