Both Assets B and C Plot on the SML

question 92

Multiple Choice

Both assets B and C plot on the SML.Asset B has a beta of 1.3 and an expected return of 13.1%.Asset C has a beta of 0.50 and an expected return of 7.50%.The risk-free rate is 4% and the expected return on the market portfolio is 11%.If you wish to hold a portfolio consisting of assets B and C,and have a portfolio beta equal to 1.0,what proportion of the portfolio must be in asset C?

• A)0.375
• B)0.50
• C)0.625
• D)0.75

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Definitions:

Haploid Gametes

Haploid gametes are reproductive cells that contain a single set of chromosomes and unite during sexual reproduction to form a diploid zygote.

Gonads

Gonads are the primary reproductive organs, with ovaries present in females and testes in males, responsible for producing gametes and hormones.

Gametogenesis

The process by which gametes are produced in the reproductive organs, involving meiosis to produce haploid sex cells.

Haploid Cells

Cells that contain one complete set of chromosomes, typical of gametes (sperm and eggs) in sexually reproducing organisms.