Question
You have estimated that the annual expected return on Apple stock is 15% and that Apples standard deviation is 20%. The Treasury bill rate is
You have estimated that the annual expected return on Apple stock is 15% and that Apples standard deviation is 20%. The Treasury bill rate is 1%. You are considering an asset allocation between T-bills and Apple stock and given your risk preferences and investment objectives, you seek to establish a portfolio with an expected return of 8%.
27. In relation to the problem above, what proportion of your portfolio should you allocate to Apple stock (rounding to the nearest whole percent)?
a. 20%
b. 40%
c. 50%
d. none of the above.
28. In relation to the problem above, what will be the variance on your portfolio?
(a) 0.01
(b) 0.04
(c) 0.08
(d) 0.1
(e) 0.15
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