The Combination of the Efficient Set of Portfolios with a Riskless

question 26

Multiple Choice

The combination of the efficient set of portfolios with a riskless lending and borrowing rate results in:

• A)the capital market line which shows that all investors will only invest in the riskless asset.
• B)the capital market line which shows that all investors will invest in a combination of the riskless asset and the tangency portfolio.
• C)the security market line which shows that all investors will invest in the riskless asset only.
• D)the security market line which shows that all investors will invest in a combination of the riskless asset and the tangency portfolio.
• E)None of the above.

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Definitions:

MTBF

Mean Time Between Failures, a measure of reliability for a system, indicating the average time between failures.

Standard Deviation

A statistical measure that quantifies the amount of variation or dispersion of a set of data values from their mean.

Preventive Maintenance

Scheduled maintenance activities conducted on equipment before faults occur in order to prevent breakdowns and minimize downtime.

Redundancy

The use of components in parallel to raise reliability.