12.An investor has a $100,000 investment to allocate between a risky asset and a riskless asset.The equation for the trade-off line is determined to be E(r)=0.07+0.12w.If the investor is requiring a portfolio composition corresponding to an expected rate of return of 0.17,how much should be invested in the riskless asset? (a$16,667 (b)$29,412 (c)$70,588 (d$83,333 Answer:(a) 13.An investor has a $100,000 investment to allocate between a risky asset and a riskless asset.The equation for the trade-off line is determined to be E(r)=0.07+0.12w.If the investor requires a portfolio composition corresponding to an expected rate of return of 0.17,what is the corresponding standard deviation of the portfolio?The standard deviation of risky asset is 0.3. (a)0.05 (b)0.25 (c)0.49 (d0.83 Answer:(b) 14.The expected rate of return on a risky asset is 0.13 and the riskless rate is 0.06.The standard deviation of the risky asset is 0.25.What happens to the slope of the trade-off line if the riskless rate changes to 0.05 per year and the expected return on the risky asset changes to 0.14? (a)No change (b)The slope of the line falls from 36%to 28% (c)The slope of the line rises from 28%to 36% (d)The slope of the line rises from 52%to 56% Answer:(c) 15.The formula for the trade-off line between risk and expected return is (a)E(r)=r+w[E(rs)-ri] (b)E(r)=r+[Er)- (C)E(r)=r+w[E(r)+r月 (d)all of the above Answer:(a) 12-412-4 12. An investor has a $100,000 investment to allocate between a risky asset and a riskless asset. The equation for the trade-off line is determined to be E(r) = 0.07 + 0.12w. If the investor is requiring a portfolio composition corresponding to an expected rate of return of 0.17, how much should be invested in the riskless asset? (a) $16,667 (b) $29,412 (c) $70,588 (d) $83,333 Answer: (a) 13. An investor has a $100,000 investment to allocate between a risky asset and a riskless asset. The equation for the trade-off line is determined to be E(r) = 0.07 + 0.12w. If the investor requires a portfolio composition corresponding to an expected rate of return of 0.17, what is the corresponding standard deviation of the portfolio? The standard deviation of risky asset is 0.3. (a) 0.05 (b) 0.25 (c) 0.49 (d) 0.83 Answer: (b) 14. The expected rate of return on a risky asset is 0.13 and the riskless rate is 0.06. The standard deviation of the risky asset is 0.25. What happens to the slope of the trade-off line if the riskless rate changes to 0.05 per year and the expected return on the risky asset changes to 0.14? (a) No change (b) The slope of the line falls from 36% to 28% (c) The slope of the line rises from 28% to 36% (d) The slope of the line rises from 52% to 56% Answer: (c) 15. The formula for the trade-off line between risk and expected return is ________. (a) E(r) = rf + w[E(rs) – rf] (b) E(r) = rf + [E(rs) – rf] (c) E(r) = rf + w[E(rs) + rf] (d) all of the above Answer: (a)