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
1.040
0.25
0.50
0.80

The slope of the capital allocation line formed with the risky asset and the risk-free asset is approximately 0.5

Step-by-step explanation:

given data

invested = $1000

rate of return = 16%

standard deviation = 20%

rate of return = 6%

to find out

The slope of the capital allocation line

solution

we know here rate of return equation for find  slope of line that is

R1 = R2 + σ × slope of line    1

here R is rate of return and and σ is standard deviation

put here all value in equation 1

16 = 6 + 20 × slope of line

20 × slope of line = 10

slope of line = 0.5

so

The slope of the capital allocation line formed with the risky asset and the risk-free asset is approximately 0.5

step-by-step explanation:

no, her answer is not correct.   we square the lengths of all sides and then determine whether the pythagorean theorem holds here:

9² + 15² = 306.   this is not equal to the square of the longest side ( that square being 395.   answer c is correct.