The difference between the optimal risky portfolio and optimal complete portfolio?
The difference between the optimal risky portfolio and optimal complete portfolio?
Homework Answers
Answer-
Optimal risky portfolio = market portfolio + active
portfolio
Optimal complete portfolio = Risk Free Rate (RFR) +
Optimal risky portfolio
The optimal risky portfolio uses an investor's extent of risk-aversion to find the optimal complete portfolio specific to the investor. The individuals who can take more risk allocate more to optimal risky portfolio than the individuals who can take lower risk. In general the higher the risk the higher the returns and higher the volatility of returns as well.
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The difference between the optimal risky portfolio and optimal
complete portfolio?
You have $100,000 invested in a complete portfolio that consists of a portfolio of risky assets...
You have $100,000 invested in a complete portfolio that consists of a portfolio of risky assets (P) and T-Bills. The information below refers to these assets. E(rp)=10% σp =20% T-Bill rate=3% Proportion of T-Bill in the complete portfolio: 30% Proportion of risky portfolio P in the complete portfolio: 70% Composition of P: Stock X 30% Stock Y 25% Stock Z 45% Total 100% What is the expected return on your complete portfolio? What is the standard deviation of your complete...
optimal risky portfolio
Mr X can invest in two financial securities, security A and security B. The table below gives a description of the states of the world, their respective probabilities and the return of each security in each state. State: Bear Normal Bull Probability of state 20% 40% 40%Return of security A - 40% 0% 100% Return of security B -6% ...
Under MPT (Modern Portfolio Theory), what do the risk-free rate and the optimal risky portfolio create...
Under MPT (Modern Portfolio Theory), what do the risk-free rate and the optimal risky portfolio create and why is it important relative to all other possible portfolios (with the exception of the optimal risky portfolio)?
Under MPT (Modern Portfolio Theory), what do the risk-free rate and the optimal risky portfolio create...
Under MPT (Modern Portfolio Theory), what do the risk-free rate and the optimal risky portfolio create and why is it important relative to all other possible portfolios (with the exception of the optimal risky portfolio)?
Suppose the optimal risky portfolio has an expected return of 13.25% and a standard deviation of...
Suppose the optimal risky portfolio has an expected return of 13.25% and a standard deviation of 24.57%. Mr. Jones wants an efficient portfolio with an expected return of 12%. If the optimal risky portfolio consists of 70.75% in stocks and 29.25% in bonds, what is the proportion of Mr. Jones' portfolio invested in the stock fund. the risk-free rate is 5.5%.
Please show all work. Thanks! An optimal risky portfolio has been developed with investments in stocks...
Please show all work. Thanks!
An optimal risky portfolio has been developed with investments in stocks and bonds This optimal portfolio has 24% invested in bonds and the remainder invested in stocks The optimal portfolio mean return is 12.05% and its standard deviation is 18.45% The t-bill rate is 4.75%; what is the mean of the complete portfolio if 33% is invested in the optimal portfolio and theremainder is invested in T-bills? a What is the resulting allocation to stocks...
Which of the following statement is wrong about the optimal risky portfolio? It is the same...
Which of the following statement is wrong about the optimal risky portfolio? It is the same for all investors. It is the tangent portfolio It's the portfolio with the highest Sharpe-Ratio it depends on the risk-aversion of the investor
You invest $1,200 in a complete portfolio. The complete portfolio is composed of a risky asset...
You invest $1,200 in a complete portfolio. The complete portfolio is composed of a risky asset with an expected rate of return of 13% and a standard deviation of 20% and a Treasury bill with a rate of return of 4%. __________ of your complete portfolio should be invested in the risky portfolio if you want your complete portfolio to have a standard deviation of 7%.
You invest $1,900 in a complete portfolio. The complete portfolio is composed of a risky asset...
You invest $1,900 in a complete portfolio. The complete portfolio is composed of a risky asset with an expected rate of return of 13% and a standard deviation of 18% and a Treasury bill with a rate of return of 3%. __________ of your complete portfolio should be invested in the risky portfolio if you want your complete portfolio to have a standard deviation of 9%.
An investor's risk aversion determines her a. optimal mix of assets in her risky portfolio b....
An investor's risk aversion determines her a. optimal mix of assets in her risky portfolio b. risk-free rate on borrowing c. Sharpe ratio d. capital allocation line e. optimal risky portfolio f. risk-free rate on lending
Please show all work. Thanks!
An optimal risky portfolio has been developed with investments in stocks and bonds This optimal portfolio has 24% invested in bonds and the remainder invested in stocks The optimal portfolio mean return is 12.05% and its standard deviation is 18.45% The t-bill rate is 4.75%; what is the mean of the complete portfolio if 33% is invested in the optimal portfolio and theremainder is invested in T-bills? a What is the resulting allocation to stocks...
Which of the following statement is wrong about the optimal risky portfolio? It is the same for all investors. It is the tangent portfolio It's the portfolio with the highest Sharpe-Ratio it depends on the risk-aversion of the investor
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