You invest $100 in a risky asset with an expected rate of returnof 15% and a standard deviation of 15% and a T-bill with a rate ofreturn of 5% (and a standard deviation of 0).
6. What percentages of your money must be invested in the riskyasset and the risk-free asset, respectively, to form a portfoliowith an expected return of 13%?
A) 20% and 80% B) 25% and 75% C) 80% and 20% D) 75% and 25%
7. What percentages of your money must be invested in therisk-free asset and the risky asset, respectively, to form aportfolio with a standard deviation of 8%?
A) 67% and 33% B) 53% and 47% C) 27% and 73% D) 47% and 53%
8. A portfolio that has an expected return of 23% is formedby
A) borrowing $40 at the risk-free rate and investing the totalamount ($140) in the risky asset. B) borrowing $80 at the risk-freerate 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 rateand investing the total amount ($185) in the risky asset.
9. The slope of the CAL formed with the risky asset and therisk-free asset is equal to
A) 0.5667. B) 0.6667. C) 0.7667 D) 0.4667.
