The expected return on the market is 15% with a standard deviation of 12.5% and the risk-free rate is 5%. Which of the following portfolios are correctly priced? Portfolio Expected Return 1 2 3 4 O 1 and 4 only O 3 and 4 only O 1 and 3 only O 2 and 3 only 30.00% 25.00% 10.00% 9.00% Standard Deviation 28.75% 25.00% 6.25% 5.50%

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
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The expected return on the market is 15% with a standard deviation of 12.5% and the risk-free rate is 5%. Which of the following
portfolios are correctly priced?
Portfolio Expected Return
1
2
3
4
1 and 4 only
O 3 and 4 only
1 and 3 only
O 2 and 3 only
30.00%
25.00%
10.00%
9.00%
Standard Deviation
28.75%
25.00%
6.25%
5.50%
Transcribed Image Text:The expected return on the market is 15% with a standard deviation of 12.5% and the risk-free rate is 5%. Which of the following portfolios are correctly priced? Portfolio Expected Return 1 2 3 4 1 and 4 only O 3 and 4 only 1 and 3 only O 2 and 3 only 30.00% 25.00% 10.00% 9.00% Standard Deviation 28.75% 25.00% 6.25% 5.50%
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