Fill in the table below for the indifference curve that corresponds to a Utility = 0.05 and an investor risk aversions of A=3 and A=4.
Please give steps on how to solve
Standard deviation |
Variance | E (R) A=3 | E (R) A=4 |
0.0 |
|||
0.05 |
|||
0.10 |
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0.15 |
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0.20 |
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0.25 |
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Fill in the table below for the indifference curve that corresponds to a Utility = 0.05...
1. Write down the equation of a utility function and draw an indifference curve that corresponds to each of the following cases. (a) Carol is always willing to give up 2 pizzas in exchange for 1 additional beer no matter how many pizzas and beers she has in her consumption bundle. (b) Bob always consumes beer and pizza in fixed proportions. Specifically, if Bob has 1 pizza, he consumes precisely 2 beers and additional beers represent no additional utility for...
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) What does the indifference curve represent?
ii) What is CAL(P)?
iii) What is the efficient frontier of risky assets?
iv) Explain what the point C represents.
v) How can an investor access pointK?
(c) Outline and discuss three limitations of the CAPM.
(b) Consider the following graph: CAL(P) E(R) Indifference curve Efficient frontier of risky assets Optimal risky portfolio Expected return (%) Standard deviation (%)
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For this and the next 4 questions: Please use the following data to answer the questions that follow. You may copy over the data to Excel and use spreadsheet functions to perform the required analyses. 1. Calculate the covariance between the Market and Stock A. 2. Calculate the COVARIANCE BETWEEN STOCK B AND MARKET. 3. What is the VARIANCE OF STOCK A? 4. What is the STANDARD DEVIATION OF THE MARKET? Year Market Stock A Stock B 1 -0.10 -0.17...
An investor has mean-variance utility preferences: U = E(R) – 0.5A02 coefficient of risk aversion A = 5. market expected return is E(RM) = 5% standard deviation of the market is om = 10%. risk-free rate is Rf = 2%. Under CAPM, what's the weight of the risk-free assets (Wf) on your optimal portfolio?
Assume an investor has mean-variance utility preferences U = E(R) - 0.5A02 with coefficient of risk aversion A = 5. The market expected return is E(RM) = 5% and the standard deviation of the market is OM = 10%. The risk-free rate is Rs = 2%. Under CAPM, what's the weight of the risk-free assets (We) on your optimal portfolio?