Question
Please explain with great detail as I want to understand this. 1)An investor develops a portfolio with 25% in a riskfree asset with a return
Please explain with great detail as I want to understand this.
1)An investor develops a portfolio with 25% in a riskfree asset with a return of 6% and the rest in a risky asset with expected return of 9% and standard deviation of 6%. The standard deviation for the portfolio is:
(a) 20.3%. (b) 4.5%. (c) 0.0%. (d) 27.0%.
2)An investor has a portfolio with 60% in a riskfree asset with a return of 5% and the rest in a risky asset with an expected return of 12% and a standard deviation of 10%. Respectively, the expected return and standard deviation of the portfolio are (a) 10.5%. (b) 9.7%. (c) 11.4%. (d) 12.6%.
3)If the proportion invested in the riskfree asset is -.4, the proportion invested in the risky portfolio is: (a) -1.4. (b) 0.6. (c) 0.0. (d) 1.4. (e) -0.6.
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