alleryStart learning →Rf is 4%, tangency return 12%, SD 16%. On the capital allocation line, return at SD 8% is
A6%
B10%
C12%
D8%
Answer & Solution
Correct answer: D. 8%
E(R) = 4% + 8% x (12% - 4%) / 16% = 4% + 4% = 8%.
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