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Unformatted text preview: B) 50% and 50% C) 60% and 40% D) 40% and 60% E) Cannot be determined. Answer: C Difficulty: Moderate Rationale: 0.08 = x(0.20); x = 40% in risky asset. 35. The slope of the Capital Allocation Line formed with the risky asset and the riskfree asset is equal to A) 0.47 B) 0.80 C) 2.14 D) 0.40 E) Cannot be determined. Answer: D Difficulty: Moderate Rationale: (0.11  0.03)/0.20 = 0.40. Use the following to answer questions 3638: You invest $1000 in a risky asset with an expected rate of return of 0.17 and a standard deviation of 0.40 and a Tbill with a rate of return of 0.04. Bodie, Investments, Sixth Edition...
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This note was uploaded on 01/31/2010 for the course ECON 3660DE taught by Professor Patrickmartinandvitalialexeev during the Spring '10 term at University of Guelph.
 Spring '10
 PatrickMartinandVitaliAlexeev
 Economics

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