Exhibit 6-3
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)

question 78

Multiple Choice

Exhibit 6-3
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S) $\begin{array}{c}\begin{array}{cc}\text { Asset (A) } & \text { Asset (B) } \\\hline E\left(R_{A}\right) =9 \% & E\left(R_{B}\right) =11 \% \\\left(\sigma_{A}\right) =4 \% & \left(\sigma_{B}\right) =6 \% \\W_{A}=0.4 & W_{B}=0.6\end{array}\\\mathrm{COV}_{\mathrm{A,B}}=0.0011\end{array}$
-Refer to Exhibit 6-3. 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) 8.95%
• B) 9.30%
• C) 9.95%
• D) 10.20%
• E) 10.70%

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Definitions:

Inactive Substances

Substances that have no intended therapeutic effect; often used as placebos in clinical trials to assess the efficacy of active treatments.

Fake Treatments

Interventions or procedures that are designed to mimic real treatments but do not contain any active ingredients or therapeutic value, often used in the context of clinical trials as placebos.

Experiment

A controlled test of a hypothesis in which the researcher manipulates one variable to discover its effect on another.

Independent Variable

In an experiment, the variable that is manipulated or changed by the researcher to observe its effects on the dependent variable.