A Risk-Free Asset Is Available at 5% Interest

A risk-free asset is available at 5% interest. Another asset is available with a mean rate of return of 15% but with a standard deviation of 5%. An investor is considering an investment portfolio consisting of some of each stock. On a graph with standard deviation on the horizontal axis and mean on the vertical axis, the budget line that expresses the alternative combinations of mean return and standard deviation possible with portfolios of these assets is a straight line with

A) slope 2.
B) slope -3.
C) increasing slope as you move left.
D) slope -1.
E) slope -.

Correct Answer:

Verified

Show Answer