- CFA Exams
- CFA Level I Exam
- Study Session 18. Portfolio Management (1)
- Reading 52. Portfolio Risk and Return: Part I
- Subject 4. Risk Aversion and Portfolio Selection

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**CFA Practice Question**

An investor invests 30 percent of his wealth in a risky asset with an expected rate of return of 15 percent and a variance of 400, and 70 percent in a T-bill that pays 6 percent. His portfolio's expected return and standard deviation are ______ and ______, respectively.

A. 8.7%; 12%

B. 8.7%; 6%

C. 11.4%; 6%

**Explanation:**Expected return: 30% x 15% + 70% x 6% = 8.7%

Standard deviation: 30% x 20% = 6%

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**User Contributed Comments**
2

User |
Comment |
---|---|

eduardodre |
where 20% does come from? |

eduardodre |
square root of variance in case of need |