1-

Asset A has an expected return of 20% and return volatility of 15%. Asset B has an expected return of 15% and return volatility of 12%. The risk free asset has a return of 5%. A risk-averse investor would prefer a portfolio using the risk-free asset and __.

Asset A

Asset B

The answer cannot be determined from the data given.

A and B are the same to the investor

2-

You invest 40% of your money in the treasury bill that pays 4% and 60% of your money in a risky portfolio with an expected return of 15% and a volatility of 12%. What is the expected return and volatility of your investment, respectively?

15.2%, 22.3%

9.5%, 9.87%

11%, 13.8%

A. 10.6%, 7.2%