You Have Been Hired as a Portfolio Manager for a Stock

Multiple Choice

You have been hired as a portfolio manager for a stock brokerage.Your first job is to invest $100,000 in a portfolio of two assets.The first asset is a safe asset with a sure return of 4% interest.The second asset is a risky asset with a 26% expected rate of return, but the standard deviation of this return is 10%.Your client wants a portfolio with as high a rate of return as possible consistent with a standard deviation no larger than 4%.How much of her money do you invest in the safe asset?

A) $22,000
B) $40,000
C) $64,000
D) $36,000
E) $60,000