Suppose that Ms.Lynch can make up her portfolio using a risk-free asset that offers a surefire rate of return of 10% and a risky asset with an expected rate of return of 20%, with standard deviation 5.If she chooses a portfolio with an expected rate of return of 17.50%, then the standard deviation of her return on this portfolio will be
A)3.75%.
B)7.50%.
C)6.75%.
D)1.88%.
E)None of the above.

Question

Suppose that Ms.Lynch  can make up her portfolio using a risk-free asset that offers a surefire rate of return of 10% and a risky asset with an expected rate of return of 20%, with standard deviation 5.If she chooses a portfolio with an expected rate of return of 17.50%, then the standard deviation of her return on this portfolio will be
A)3.75%.
B)7.50%.
C)6.75%.
D)1.88%.
E)None of the above.

Quizplus · Accepted Answer

The Answer is A

Suppose That Ms