You Own a Portfolio That Is Invested 50% in a Risk-Free

Multiple Choice

You own a portfolio that is invested 50% in a risk-free asset and 50% in a stock that is equally as risky as the market. The risk-free asset has an expected return of 5%. Your portfolio has an expected return of 8.80%. What is the expected return on the market?

A) 11.60%
B) 11.75%
C) 12.30%
D) 12.35%
E) 12.60%