Question 1 1 pts The geometric mean average historical rate of return on a fund over the past four years, if the annual rates have been -12%, 10%, 0% and 12%, is impossible to calculate from the information provided. 2.54% 8.50% 3.16%. 2.04%. Question 2 1 pts Treasury notes are paying a 1% rate of return. An investor with a coefficient of risk aversion of 3 should invest in a risky portfolio with a standard deviation of 24%pa only if the risky portfolio's expected return is at least 9.64% O 4.00% 11.68% 6.84%. 20.28%. Question 3 1 pts Consider a risk-free rate of interest of 1% and the following risky portfolios: Portfolio V: E(r) = 10%; risk = 20%. Portfolio W: E(r) = 6%; risk = 15%. Portfolio X: E(r) = 8%; risk = 17%. Portfolio Y: E(r) = 9%; risk = 18%. Portfolio Z: E(r) = 15%; risk = 28%. An investor must develop a complete portfolio by combining the risk-free asset with one of the risky portfolios mentioned above. The risky portfolio the investor should choose as part of his complete portfolio to achieve the best Capital Allocation Line would be O portfolio X O portfolio Y. portfolio V. O portfolio W. O portfolio Z Question 4 1 pts You are considering investing $100,000 in a complete portfolio. The complete portfolio is composed of Treasury notes that pay 1% and a risky portfolio, P. constructed with two risky securities X and Y. The optimal weights of X and Y in P are 60% and 40% respectively. X has an expected rate of return of 10% and Y has an expected rate of return of 6%. To form a complete portfolio with an expected rate of return of 4%, you should invest approximately in the risky portfolio. This will mean you will also invest approximately _and of your complete portfolio in security X and Y respectively. 25%, 45%, 30%. 50%, 30%, 20% 60%, 24%, 16% 40%, 24%, 16% 0%, 60%, 40% Question 5 1 pts Adding additional risky assets to set of available assets from which a portfolio may be constructed will generally move the efficient frontier and to the horizontally, right down, right down, left. up, right. O up, left. Previous Next