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Samuel Perkins uses the capital market line (CML) to advise his clients. Current market expectations are as follows: Expected return on the market portfolio 12%
Samuel Perkins uses the capital market line (CML) to advise his clients. Current market expectations are as follows: Expected return on the market portfolio 12% Standard deviation on the market portfolio 20% Risk-free rate 4% 28. Perkins advises a client who would like to have a portfolio with a standard deviation equal to 10%. Using the CML, a portfolio meeting the client's risktolerance will have an expected return closest to: A. 6%. B. 8%. C. 10% 29. Perkins advises another client who currently owns a portfolio with an expected return of 8% and a standard deviation of 15%. The amount (percentage points) by which Perkins can improve his client's expected return by using the CML while maintaining the client's 15% standard deviation is closest to: A. 2%. B. 4%. C. 6%. 30. One of Perkins's clients has an expected return objective of 10%. Using the CML, Perkins can create a portfolio with a standard deviation as low as: A. 13% B. 14%. C. 15%. 32. What is the appropriate allocation to the optimal risky portfolio for a Perkins's client who has a 10% standard deviation objective? A. 30% B. 40%. C. 50%. 33 From the data provided, the intercept and slope of the CML are clostst to: A. 4% intercept and a 8% slope. B.4% intercept and a 40% slope. C. 8% intercept and a 40% slope
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