1. A profit center operating budget may be expected to show:
A. operating costs only.
B. operating costs and revenues.
C. operating costs and capital expenditures.
D. None of these is correct.
2. Suppose that you have $1 million and the following two opportunities from which to construct a portfolio:
a. Risk-free asset earning 11% per year.
b. Risky asset with expected return of 26% per year and standard deviation of 34%.
If you construct a portfolio with a standard deviation of 24%, what is its expected rate of return?