Figure 27-2.On the graph,x represents risk and y represents return.
-Refer to Figure 27-2.Point A represents a situation in which
A) all of a person's savings are allocated to a class of safe assets.
B) the person knows with certainty that his or her return will be 3 percent.
C) the standard deviation of the person's portfolio is zero.
D) All of the above are correct.

Question

Figure 27-2.On the graph,x represents risk and y represents return. 
-Refer to Figure 27-2.Point A represents a situation in which
A) all of a person's savings are allocated to a class of safe assets. 
B) the person knows with certainty that his or her return will be 3 percent. 
C) the standard deviation of the person's portfolio is zero. 
D) All of the above are correct.

Quizplus · Accepted Answer

Point A is at the bottom left corner of the graph, which implies both low risk and low return. This means that the person has allocated all his savings to a class of safe assets with a certain return of 3 percent, which implies no risk as the standard deviation of the portfolio is zero. Therefore, all of the statements (A), (B), and (C) are correct.