Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Your client, Bo Regard, holds a complete portfolio that consists of a portfolio of risky assets (P) and T-Bills. The information below refers to these assets. What is the expected return of the complete portfolio?
Group of answer choices
a. 10.32%
b. 5.28%
c. 9.62%
d. 8.44%
e. 7.58%
Transcribed Image Text:### Portfolio Composition and Performance Data
- **Expected Return of Portfolio (E(Rₚ))**: 12.00%
- **Standard Deviation of Portfolio (P)**: 7.20%
- **T-Bill Rate**: 3.60%
#### Allocation within the Complete Portfolio:
- **Proportion in Portfolio P**: 80%
- **Proportion in T-Bills**: 20%
#### Composition of Portfolio P:
- **Stock A**: 40.00%
- **Stock B**: 25.00%
- **Stock C**: 35.00%
- **Total Composition**: 100.00%
This data provides an overview of a hypothetical investment portfolio, detailing expected returns, risk (as measured by standard deviation), and the distribution of investments between stocks and T-Bills for risk management and potential growth. The detailed composition within the stocks section illustrates diversification strategies to balance risk and reward.
Transcribed Image Text:**Question 4**
**Points: 1**
Your client, Bo Regard, holds a complete portfolio that consists of a portfolio of risky assets (P) and T-Bills. The information below refers to these assets. What is the expected return of the complete portfolio?
- **E(Rₚ):** 12.00%
- **Standard Deviation of P:** 7.20%
- **T-Bill rate:** 3.60%
- **Proportion of Complete Portfolio in P:** 80%
- **Proportion of Complete Portfolio in T-Bills:** 20%
**Composition of P:**
- **Stock A:** 40.00%
- **Stock B:** 25.00%
- **Stock C:** 35.00%
- **Total:** 100.00%
**Multiple Choice Options:**
- 10.32%
- 5.28%
- 9.62%
- 8.44%
- 7.58%
This question involves calculating the expected return of a complete portfolio made up of risky assets and T-Bills, based on the given proportions and rates.
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