Question 16

a) You manage a risky portfolio with an expected rate of return of 14 percent and a standard deviation of 46 percent. The T-bill rate is 4.00%. Your client chooses to invest 85 percent of a portfolio in your fund and 15 percent in a T-bill MMF (money market fund). What is the expected return of your client's portfolio?

	A.	15.00%
	B.	13.50%
	C.	12.50%
	D.	14.10%

b)A project has a 70% probability of doubling your investment in one year and a 30.00% chance of losing half of your investment in one year. What is the standard deviation of the rate of return on this investment?

	A.	64.50%
	B.	68.74%
	C.	61.60%
	D.	31.77%

C) If some stock has an expected rate of return of 6.00 and the risk-free rate is 8.00% and the expected rate of return on the market is 18.00%, What is the stocks beta?

	A.	-0.25
	B.	0.30
	C.	-0.20
	D.	0.45