QUESTION 20 You like to invest S 10 0 0 na complete portfolio. The cor plete por

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QUESTION 20 You like to invest S 10 0 0 na complete portfolio. The cor plete portfolio is cor prised of a risky asset with an expected rate of rebrn of 12% and a standard deviation of 15% What proportion of your money should be invested in the risky asset to form a portfolio with an expected rate of return of 9%(msmethatn free rate is 5%)? Oa $4200 O b. $6400 O c $7500 O d. $5700o QUESTION 21 What is the standard deviation of your complete portfolio in the problem above? 0 a. 7.6% 12.2% O d. 4.19% IESTION 22 Chick Save and Submit to save and submit. Click Save All Answers to save all answers. MacBook Air

Explanation / Answer

Answer: The term random walk is used in investment to refer to "Stock price changes that are random and unpredictable". So option "c" is correct.

Share prices are random and these do not get influenced by past events.

Answer(18): Option "d" is correct.

Studies of positive earning surprises have shown that there is "a positive abnormal return on the day positive earnings surprises are announced and a positive drift in the stock prices on the days following the earnings surprise announcements.

Answer(14): The term efficient frontier refers to the set of portfolio which yields the greatest return for a given level of risk and involve the least risk for a given level of return.

Option "c" is correct that says "both a and b are correct.

Answer(15): In the context of CAPM, the optimal risky portfolio, "may vary from investor to investor due to degree of risk aversion.

Option "c" is correct.

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