Question: Exhibit 6.5 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM Asset (A) Asset (B) E(RA) = 8% E(RB) = 15% (0A) = 7% (OB) =

Exhibit 6.5 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM Asset (A) Asset (B) E(RA) = 8% E(RB) = 15% (0A) = 7%

Exhibit 6.5 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM Asset (A) Asset (B) E(RA) = 8% E(RB) = 15% (0A) = 7% (OB) = 10% WA = 0.4 WB = 0.6 COVA,B = 0.0006 Refer to Exhibit 6.5. What is the expected return of a portfolio of two risky assets if the expected return E(Ri), standard deviation (Q;), covariance (COVij), and asset weight (Wi) are as shown above? a. 8.0% b. 7.4% c. 11.6% d. 12.2% e. 9.1% An individual in the 36 percent tax bracket invests $5,000 in a tax-exempt IRA. If the investment earns 10% annually, what will be the value of the IRA after five years? a. $6,818 b. $7,500 C. $8,053 d. $10,879 e. $6,600

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