You invest $1,000 in a complete portfolio. the complete portfolio is composed of a risky asset with an expected rate of return of 16% and a standard deviation of 20% and a treasury bill with a rate of return of 6%. the slope of the capital allocation line formed with the risky asset and the risk-free asset is approximately
multiple choice
a. 1
b. 040
c. 80
d. 50
e. 25

d. .50

Explanation:

You invest $1,000. The complete portfolio is conformed by a set of risky assets with an expected return of 16% and a standard deviation of 20%. Considering, too, that the Treasury bill has a rate of return of 6%. The slope of the capital allocation line formed with the risky asset and the risk-free asset is approximately 0.50.

E R c= Rf + \sigmac * Slope of Line

16 = 6 + 20* Slope of Line

Slope of Line = (16-6)/20

Slope of Line = 0.50

answer; sensory adaptation;