An investor invests 70% of her wealth in a risky asset with an expected rate of return of 15% and a variance of 5%, and she puts 30% in a Treasury bill that pays 5%. Her portfolio's expected rate of return and standard deviation are and respectively.

expected rate of return = 12%

standard deviation = 15.7%

Explanation:

given data

investor invests = 70%

expected rate of return = 15%

variance = 5%

puts in a Treasury bill =30%

Pay = 5 %

solution

we get here expected rate of return that is express as

expected rate of return = (Weightage of risky asset × return of risky asset) + (Weightage of treasury bill × return of treasury bill)  ........................1

put here value

expected rate of return = (0.70 × 0.15) + (0.30 × 0.05)

expected rate of return = 10.5% + 1.5%

expected rate of return = 12%

and

and now we get standard deviation  that is

standard deviation = Weightage of risky asset × ()

standard deviation = 0.70 × ()  

standard deviation = 15.7%

the answer is 10c + 6b = 32

step-by-step explanation:

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