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Linda plans to invest in a portfolio which comprises an equity (risky) fund and a T-bill money market fund. The equity fund invested 60% in
Linda plans to invest in a portfolio which comprises an equity (risky) fund and a T-bill money market fund. The equity fund invested 60% in stock A and 40% in stock B. The expected return of stock A is 26%. The expected return of stock B is 12%. The variance of the equity fund is 8.41%. T-bill rate is 3%. What is the expected return of the equity fund? A. 16.8% B. 12.2% C. 20.4% D. 19.0%
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