27.The optimal combination of risky assets is found as between a straight line representing the riskless asset and the efficient frontier of risky assets. (a)the point of bisection (b)the point of intersection (c)the point of tangency (d)the point of highest return Answer:(c) 28.The power of diversification to reduce the riskiness of an investor's portfolio depends on the among the assets that make up the portfolio. (a)expected returns (b)variances (c)correlations (d)none of the above Answer:(c) 29.In the context of the optimal combination of risky assets,in order to decide on the menu of asset choices to offer its customers a financial intermediary should consider: (a)investor preferences (b)the expected returns and standard deviations of the risky assets (c)both a and b (d)neither a nor b Answer:(b) 30.An investor has $100,000 invested in a portfolio that is composed of a tangency portfolio and a riskless asset,such that 35%is in the tangency portfolio and 65%is in the riskless asset.If the tangency portfolio is composed of 43.75%Risky Asset A and 56.25%Risky Asset B,which of the following accurately displays the amount of money invested in each component of the portfolio? (a)$35,000 in Riskless Asset;$43,750 in Risky Asset A;$56,250 in Risky Asset B (b)$65,000 in Riskless Asset;$43,750 in Risky Asset A;$56,250 in Risky Asset B (c)$35,000 in Riskless Asset;$28,437.50 in Risky Asset A;$36,562.50 in Risky Asset B (d)$65,000 in Riskless Asset:$15,312.50 in Risky Asset A:$19,687.50 in Risky Asset B Answer:(d) 12-812-8 27. The optimal combination of risky assets is found as ________ between a straight line representing the riskless asset and the efficient frontier of risky assets. (a) the point of bisection (b) the point of intersection (c) the point of tangency (d) the point of highest return Answer: (c) 28. The power of diversification to reduce the riskiness of an investor’s portfolio depends on the ________ among the assets that make up the portfolio. (a) expected returns (b) variances (c) correlations (d) none of the above Answer: (c) 29. In the context of the optimal combination of risky assets, in order to decide on the menu of asset choices to offer its customers a financial intermediary should consider: (a) investor preferences (b) the expected returns and standard deviations of the risky assets (c) both a and b (d) neither a nor b Answer: (b) 30. An investor has $100,000 invested in a portfolio that is composed of a tangency portfolio and a riskless asset, such that 35% is in the tangency portfolio and 65% is in the riskless asset. If the tangency portfolio is composed of 43.75% Risky Asset A and 56.25% Risky Asset B, which of the following accurately displays the amount of money invested in each component of the portfolio? (a) $35,000 in Riskless Asset; $43,750 in Risky Asset A; $56,250 in Risky Asset B (b) $65,000 in Riskless Asset; $43,750 in Risky Asset A; $56,250 in Risky Asset B (c) $35,000 in Riskless Asset; $28,437.50 in Risky Asset A; $36,562.50 in Risky Asset B (d) $65,000 in Riskless Asset; $15,312.50 in Risky Asset A; $19,687.50 in Risky Asset B Answer: (d)