A Portfolio Manager Manages a Fund with an Expected Rate

question 19

Multiple Choice

A portfolio manager manages a fund with an expected rate of return of 16% and a standard deviation of 30%. The T-bill rate is 6%. If a client wanted to invest 80% of his portfolio in the fund and 20% in T-bills, what would the expected value of the portfolio be?

• A) 11%
• B) 12.5%
• C) 16%
• D) 14%

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Definitions:

Institutions

Organizations or complex social systems that establish patterns of behavior and rules within a society, such as educational, religious, or financial organizations.

Latency Stage

In psychoanalytic theory, a period between childhood and puberty when sexual feelings are dormant and children engage in activities that develop their skills and interests.

Deductive Reasoning

A logical process in which a conclusion follows necessarily from the premises presented, moving from general to specific.

Personal Constructs

Individual beliefs or concepts through which people perceive, interpret, and make sense of the world around them.