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Your investment portfolio consists of $10000 worth of Google stock. Suppose that the risk free rate is 4%, Google stock has an expected return of
Your investment portfolio consists of $10000 worth of Google stock. Suppose that the risk free rate is 4%, Google stock has an expected return of 14% and a volatility of 35%, and the market portfolio has an expected return of 12% and a volatility of 18%. Assume that the CAPM assumption hold. What alternative investment has the lowest possible volatility while having the same expected return as Google? A. -25% in the risk-free asset and +125% in the market portfolio B. -20% in the risk-free asset and +120% in the market portfolio C. 0% in the risk-free asset and +100% in the market portfolio D. 20% in the risk-free asset and +80% in the market portfolio
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