Deck 13: B: Risky Assets

Question 1

Suppose that Ms.Lynch in Problem 1 can make up her portfolio using a risk-free asset that offers a surefire rate of return of 5% and a risky asset with an expected rate of return of 10%,with standard deviation 5.If she chooses a portfolio with an expected rate of return of 8.75%,then the standard deviation of her return on this portfolio will be

A) 7.50%.
B) 3.75%.
C) 1.88%.
D) 6.75%.
E) None of the above.

Answer 1

3.75%.

Question 2

Suppose that Ms.Lynch in Problem 1 can make up her portfolio using a risk-free asset that offers a surefire rate of return of 10% and a risky asset with an expected rate of return of 20%,with standard deviation 5.If she chooses a portfolio with an expected rate of return of 20%,then the standard deviation of her return on this portfolio will be

A) 2.50%.
B) 8%.
C) 5%.
D) 10%.
E) None of the above.

Answer 2

5%.

Question 3

Suppose that Ms.Lynch in Problem 1 can make up her portfolio using a risk-free asset that offers a surefire rate of return of 15% and a risky asset with an expected rate of return of 25%,with standard deviation 5.If she chooses a portfolio with an expected rate of return of 20%,then the standard deviation of her return on this portfolio will be

A) 2.50%.
B) 5%.
C) 5.50%.
D) 1.25%.
E) None of the above.

Answer 3

2.50%.

Question 4

Suppose that Ms.Lynch in Problem 1 can make up her portfolio using a risk-free asset that offers a surefire rate of return of 10% and a risky asset with an expected rate of return of 20%,with standard deviation 5.If she chooses a portfolio with an expected rate of return of 17.50%,then the standard deviation of her return on this portfolio will be

A) 3.75%.
B) 7.50%.
C) 6.75%.
D) 1.88%.
E) None of the above.

Question 5

Suppose that Ms.Lynch in Problem 1 can make up her portfolio using a risk-free asset that offers a surefire rate of return of 10% and a risky asset with an expected rate of return of 15%,with standard deviation 5.If she chooses a portfolio with an expected rate of return of 15%,then the standard deviation of her return on this portfolio will be

A) 2.50%.
B) 8%.
C) 5%.
D) 10%.
E) None of the above.