solution
An investor is
considering two different portfolios formed with the risk-free asset and the
market portfolio M. Portfolio 1 puts equal weights in the two assets, and
portfolio 2 is a levered portfolio of M. Which statement below is correct?
Select one:
O a. Compared with M,
portfolio 2 has a higher expected return, a higher standard deviation, and the
same Sharpe ratio.
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Order Paper NowO b. Compared with M,
portfolio 2 has a higher expected return, a higher standard deviation, and a
higher Sharpe ratio.
OC. Compared with M,
portfolio 1 has a higher expected return, a higher standard deviation, and the
same Sharpe ratio.
d. Compared with M.
portfolio 1 has a higher expected return, a higher standard deviation, and a
higher Sharpe ratio.
O e. Both portfolio 1
and portfolio 2 have the same expected return, the same standard deviation, and
the same Sharpe ratio as M.
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