Exhibit 6-2
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)

question 21

Multiple Choice

Exhibit 6-2
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S) $\begin{array}{c}\begin{array}{cc}\text { Asset (A) } & \text { Asset (B) } \\\hline \mathrm{E}\left(\mathrm{R}_{\mathrm{A}}\right) =25 \% & \mathrm{E}\left(\mathrm{R}_{\mathrm{B}}\right) =15 \% \\\left(\sigma_{\mathrm{A}}\right) =18 \% & \left(\sigma_{\mathrm{B}}\right) =11 \% \\\mathrm{~W}_{\mathrm{A}}=0.75 & \mathrm{~W}_{\mathrm{B}}=0.25\\\end{array}\\\mathrm{COV}_{\mathrm{ABB}}=-0.0009\end{array}$
-Refer to Exhibit 6-2. What is the expected return of a portfolio of two risky assets if the expected return E(R_i) , standard deviation (?_i) , covariance (COV_i,j) , and asset weight (W_i) are as shown above?

• A) 18.64%
• B) 20.0%
• C) 22.5%
• D) 13.65%
• E) 11%

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Definitions:

Psychologists

Professionals who study mental processes and behavior through research and observation, often applying knowledge to assess and treat mental health issues.

Functionalism

A perspective in sociology and anthropology that interprets society as a structure with interrelated parts designed to meet the biological and social needs of individuals that make up that society.

Behavior

The actions or reactions of an organism, often in response to the environment, which can be observed and measured.

Analysis

The process of examining and breaking down complex information or data into smaller parts to gain a better understanding of it.