You invest $100 in a risky asset with an expected rate of return of 0.11 and a
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Question:
You invest $100 in a risky asset with an expected rate of return of 0.11 and a standard deviation of 0.21 and a T-bill with a rate of return of 0.045.
A portfolio that has an expected outcome of $114 is formed by
A. Investing $80 in the risky asset and $20 in the risk-free asset.
B. Bborrowing $46 at the risk-free rate and investing the total amount ($146) in the risky asset.
C. Such a portfolio cannot be formed.
D. Investing $100 in the risky asset.
E. Investing $43 in the risky asset and $57 in the risk-free asset.
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