You have invested only in the BlueChip Fund, a mutual fund that invests mainly in stocks. At the moment, the BlueChip Fund has an expected return of 14% and a volatility of 36%. Your broker suggests you to consider adding the Platinum Fund to your current portfolio. The Platinum Fund has an expected return of 8%, a volatility of 24%, and a correlation of 0.25 with the BlueChip Fund. Risk-free interest rate is equal to 3%. The difference between the expected return and the required return on the Platinum Fund is closest to: -0.005 0.134 0.032 0.210

You have invested only in the BlueChip Fund, a mutual fund that invests mainly in stocks. At the moment, the BlueChip Fund has an expected return of 14% and a volatility of 36%. Your broker suggests you to consider adding the Platinum Fund to your current portfolio. The Platinum Fund has an expected return of 8%, a volatility of 24%, and a correlation of 0.25 with the BlueChip Fund. Risk-free interest rate is equal to 3%. The difference between the expected return and the required return on the Platinum Fund is closest to: -0.005 0.134 0.032 0.210

PFIN (with PFIN Online, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)

6th Edition

ISBN:9781337117005

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter13: Investing In Mutual Funds, Etfs, And Real Estate

Section: Chapter Questions

Problem 8FPE

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