You have invested only in the BlueChip Fund, a mutual fund that invests mainly in stocks. At the moment, the BlueChip Fund has an expected return of 14% and a volatility of 36%. Your broker suggests you to consider adding the Platinum Fund to your current portfolio. The Platinum Fund has an expected return of 8%, a volatility of 24%, and a correlation of 0.25 with the BlueChip Fund. Risk-free interest rate is equal to 3%. The difference between the expected return and the required return on the Platinum Fund is closest to: -0.005 0.134 0.032 0.210

You have invested only in the BlueChip Fund, a mutual fund that invests mainly in stocks. At the moment, the BlueChip Fund has an expected return of 14% and a volatility of 36%. Your broker suggests you to consider adding the Platinum Fund to your current portfolio. The Platinum Fund has an expected return of 8%, a volatility of 24%, and a correlation of 0.25 with the BlueChip Fund. Risk-free interest rate is equal to 3%. The difference between the expected return and the required return on the Platinum Fund is closest to: -0.005 0.134 0.032 0.210

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

Problem 1PS

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