Consider a Treasury Bill with a Rate of Return of 5

question 53

Multiple Choice

Consider a Treasury bill with a rate of return of 5% and the following risky securities:
Security A: E(r) = .15; variance = .0400
Security B: E(r) = .10; variance = .0225
Security C: E(r) = .12; variance = .1000
Security D: E(r) = .13; variance = .0625
The investor must develop a complete portfolio by combining the risk-free asset with one of the securities mentioned above. The security the investor should choose as part of her complete portfolio to achieve the best CAL would be ________.

• A) security A
• B) security B
• C) security C
• D) security D

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Definitions:

Xenophobia

A fear or hatred of foreigners, people from different cultures, or strangers, often manifesting in discriminatory attitudes and behaviors.

Stereotyping

A cognitive process where individuals assign specific attributes to others based on their membership in a particular social group, often leading to oversimplified and generalized beliefs.

Ethnocentrism

The conviction that one's own ethnic group or culture is naturally superior to others.

Coherent

Logically connected and consistent, making it easy to understand.