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Assume the price of the Schwab Small-Cap index fund is $50 per share, the annual expected return is 18%, and the annual standard deviation is 0.24. Assume you have $10,000 of investment equity and you want to buy the Schwab Small-Cap fund on margin such that your total portfolio standard deviation is 0.30. Assume you can borrow at 8% annually. What is the portfolio weight in the Small-Cap index fund such that the standard deviation of your portfolio is 0.30?   Group of answer choices:   A) 1.25   B) .75   C) -.25   D) 1

Assume the price of the Schwab Small-Cap index fund is $50 per share, the annual expected return is 18%, and the annual standard deviation is 0.24. Assume you have $10,000 of investment equity and you want to buy the Schwab Small-Cap fund on margin such that your total portfolio standard deviation is 0.30. Assume you can borrow at 8% annually. What is the portfolio weight in the Small-Cap index fund such that the standard deviation of your portfolio is 0.30?   Group of answer choices:   A) 1.25   B) .75   C) -.25   D) 1

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Assume the price of the Schwab Small-Cap index fund is $50 per share, the annual expected return is 18%, and the annual standard deviation is 0.24. Assume you have $10,000 of investment equity and you want to buy the Schwab Small-Cap fund on margin such that your total portfolio standard deviation is 0.30. Assume you can borrow at 8% annually. What is the portfolio weight in the Small-Cap index fund such that the standard deviation of your portfolio is 0.30?

 

Group of answer choices:

 

A) 1.25

 

B) .75

 

C) -.25

 

D) 1

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