Asked by Carmia Mattox on May 18, 2024
Verified
You invest $1,000 in a complete portfolio. The complete portfolio is composed of a risky asset with an expected rate of return of 16% and a standard deviation of 20% and a Treasury bill with a rate of return of 6%. The slope of the capital allocation line formed with the risky asset and the risk-free asset is approximately ________.
A) 1.040
B) .80
C) .50
D) .25
Standard Deviation
A numerical metric that calculates the spread or variability within a dataset.
Capital Allocation Line
A graph showing risk-return trade-offs of different portfolios, highlighting the efficient frontier of maximum expected return for a given level of risk.
- Assemble and investigate comprehensive portfolios that blend risk-free and risky assets to increase utility maximally.
Verified Answer
KC
Learning Objectives
- Assemble and investigate comprehensive portfolios that blend risk-free and risky assets to increase utility maximally.