The Expected Return on MSFT Next Year Is 12% with a Standard

question 83

Multiple Choice

The expected return on MSFT next year is 12% with a standard deviation of 20%. The expected return on AAPL next year is 24% with a standard deviation of 30%. If James makes equal investments in MSFT and AAPL, what is the expected return on his portfolio?

• A) 20%
• B) 16%
• C) 18%%
• D) 25%

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Definitions:

Fixed Costs

Expenses that do not change in the short term regardless of the level of production or output.

Capital Expenditure

Capital expenditure involves funds spent by a company to acquire or upgrade physical assets such as equipment, property, or industrial buildings.

Wages

Payments made to employees based on the amount of time worked or the level of output produced.

Output

The total amount of goods or services produced by a company, industry, or economy.