For the next 7 questions suppose the following probability distribution for Stock Fund (S) and Bond Fund (B) holds:

	Expected Return	SD ()	Correlation Coefficient
Bond Fund	10%	10%	0
Stock Fund	15%	25%

What is the covariance between the Stock Fund and the Bond Fund?

		-120
		-100
		-75
		-60
		0

What is the expected return on a portfolio which is 40% invested in the stock fund and the rest in the bond fund?

		10%
		12%
		13%
		14%
		16%

What is the standard deviation of the return on the above portfolio?

		9.98%
		10.58%
		11.66%
		13.56%
		14.56

Now, introduce the risk-free asset. If the risk-free rate of return is 8%, what is the proportion of the optimal (tangent) risky portfolio, invested in Stock Fund?

		15.33%
		18.18%
		23.33%
		33.33%
		35.90%

What is the expected return on the optimal (tangent) risky portfolio?

		11.67%
		11.80%
		13.33%
		14.87%
		15.17%

What is the standard deviation of the return on the optimal (tangent) risky portfolio?

		9.21%
		9.57%
		10.67%
		11.03%
		13.54%