Suppose that Ms.Lynch in Workouts can make up her portfolio using a risk-free asset that offers a surefire rate of return of 10% and a risky asset with an expected rate of return of 25%, with standard deviation 5.If she chooses a portfolio with an expected rate of return of 25%, then the standard deviation of her return on this portfolio will be

A) 2.50%.
B) 8%.
C) 5%.
D) 10%.
E) None of the above.

Risk-Free Asset

An investment that is expected to deliver guaranteed returns with no risk of financial loss.

Expected Rate

A projection or estimate of the rate of return on an investment or the growth rate of an economic variable in the future.

Standard Deviation

A statistical metric that quantifies the spread or variability among a collection of values, representing the extent of dispersion within the data set.