You invest $100 in a risky asset with an expected rate of return of 15% and a standard deviation of 15% and a T-bill with a rate of return of 5% (and a standard deviation of 0). 1) What percentages of your money must be invested in the risky asset and the risk-free assel, respectively, to form a portfolio with an expected return of 13%6?
A) 20% and 80%.
B) 25% and 75%.
C) 80% and 20%.
D) 75% and 25%.
2) What percentages of your money must be invested in the risk-free asset and the risky asse respectively, to form a portfolio with a standard deviation of 8%?
A) 67% and 33%.
B) 53% and 47%.
C) 27% and 73%.
D) 47% and 53%.
3) A portfolio that has an expected outcome of $123 is formed by:.
a) borrowing $40 at the risk-free rate and investing the total amount ($140) in the risky asset.
b) borrowing $80 at the risk-free rate and investing the total amount ($180) in the risky asset.
c) borrowing $60 at the risk-free rate and investing the total amount ($160) in the risky asset.
d) borrowing $85 at the risk-free rate and investing the total amount (S185) in the risky asset.
4) The slope of the CAL formed with the risky asset and the risk-free asset is equal to:.
A) 0.5667.
B) 0.6667.
C) 0.7667.
D) 0.4667.
5) Given the capital allocation line, an investor's optimal complete portfolio is the portfolio that:.
a) maximizes expected return.
b) minimizes standard deviation risk .
c) maximizes both risk and return.
d) maximizes expected uti lity.