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Shannon Carden-Holdstock
on Dec 08, 2024

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An investor invests 40% of his wealth in a risky asset with an expected rate of return of 0.13 and a variance of 0.03 and 70% in a T-bill that pays 6%. His portfolio's expected return and standard deviation are __________ and __________, respectively.

A) 0.114; 0.128
B) 0.087; 0.063
C) 0.295; 0.125
D) 0.088; 0.069

Expected Rate of Return

The anticipated return on an investment, based on the probability of various outcomes, including both risky and risk-free returns.

Standard Deviation

A statistic that measures the dispersion or variability of a dataset relative to its mean, often used in finance to gauge investment risk.

Risky Asset

An investment that holds a significant chance of losing some or all of its value, offering the potential for higher returns to compensate for higher risk.

  • Assess the forecasted return and standard deviation for a chosen investment portfolio.
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JA
Julia AbalosDec 15, 2024
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