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Consider two portfolios Q and R with the following characteristics. Portfolio Q has an annual return of 9.31% and has a portfolio beta of 0.71.
Consider two portfolios Q and R with the following characteristics. Portfolio Q has an annual return of 9.31% and has a portfolio beta of 0.71. Its standard deviation is 16.18%. Portfolio R has an annual return of 11.34% and its standard deviation is 18.79%. Assume the risk free rate is 3.8%. You want to achieve a higher expected return with this complete portfolio than with portfolio Q. You consider a strategy of constructing a complete portfolio by using portfolio Rand the risk free asset. At the same time you want the standard deviation of the complete portfolio to be the same as portfolio Q. What is the expected return of this complete portfolio? 16.18% 10.29% 4.71% 4.61% 9.59% 3.41% 4.83% 4.01%
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