QUESTION 1 Some of a portfolio consists of stock A, which has an expected return of 17.65% and a standard deviation of returns of 23.68%, and the rest of the portfolio consists of stock B, which has an expected return of 17.65% and a standard deviation of returns of 23.68%. If the returns of stock A and stock B do not move perfectly together in the same direction by the same relative amount, then which one of the following assertions is true? Assume that the portfolio has at least some stock A and some stock B. O The expected return of the portfolio is not 17.65% and the standard deviation of the portfolio is not 23.68 O The expected return of the portfolio is not 17.65% and the standard deviation of the portfolio is 23.68 The expected return of the portfolio is 17.65% and the standard deviation of the portfolio is 23.68 The expected return of the portfolio is 17.65% and the standard deviation of the portfolio is not 23.68 The question can not be answered without more specific information on how much of the portfolio consists of stock A and how much consists of stock B

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Loanable Funds Theory

The loanable funds theory is a neoclassical theory that determines the interest rate where the demand for loanable investments and supply of loanable funds intersect. To determine the interest rate, this theory employs linear regression and a demand curve. At the equilibrium point, demand for borrowings and demand for the issuance of borrowing funds are inextricably linked. This point of equilibrium should equalize demand and the supply of money available for borrowing.