government securities can be used as a proxy for _ investment a. portfolio b. risky c....
government securities can be used as a proxy for _ investment
a. portfolio
b. risky
c. riskless
d. none of the above
Homework Answers
Option C is correct
riskless
Government Securities carry least amount of risk of default so they an be used as risk free asset.
Add Answer to:
government securities can be used as a proxy for _
investment
a. portfolio
b. risky
c....
questions 29-32 please 29. What strategy could be considered insurance for an investment in a portfolio...
questions 29-32 please
29. What strategy could be considered insurance for an investment in a portfolio of stocks? A. Covered call B. Protective put C. Short put D. Straddle E. None of the above 30. Why is the buyer of an option not required to post margin under the Option Clearing Corporation rules? A. Once an option is purchased, no further money is at risk B. The writer pays all the costs C. The credit worthiness of the buyer covers...
A and B thank you !! 10. Consider a risky portfolio. The end-of-year cash flow derived...
A and B
thank you !!
10. Consider a risky portfolio. The end-of-year cash flow derived from the portfolio will be either $10,000 or $20,000, with equal probabilities of 0.5. The alternative riskless investment in T-bills pays 2% per year. a. What is the expected cash flow from the risky portfolio? Answer: $ Show your calculation here. b. If you require a risk premium of 6% per year, how much are you willing to pay now to buy the risky...
Which of the following is a TRUE statement? A The tangent portfolio is the risky portfolio...
Which of the following is a TRUE statement? A The tangent portfolio is the risky portfolio on the efficient frontier whose tangent line cuts the horizontal axis at the risk-free rate. B The new (or super) efficient frontier represents the portfolios composed of the risk-free rate and the tangent portfolio that offers the highest expected rate of return for any given level or risk. C The separation theorem states that the investment decision, (how to construct the portfolio of risky...
Investment securities portfolio help to offset credit risk exposure means: a. High-quality securities can be purchased...
Investment securities portfolio help to offset credit risk exposure means: a. High-quality securities can be purchased and held to balance out the risk from loans. b. Their price can never go down. c. They will never default. d. They are protected against interest rates change. 13. Function(s) of a bank's security portfolio is (are) to: a. Increase tax exposure. b. Increase credit risk exposure. c. Provide a back-up source of liquidity. d. All of the above. 14. When interest rates...
Theoretically, a risk-free portfolio could be created by combining risky securities in a manner that caused...
Theoretically, a risk-free portfolio could be created by combining risky securities in a manner that caused the: Select one: a. Nondiversifiable risk to be eliminated. b. Portfolio beta to equal zero. O c. Expected return of the portfolio to equal the market expected return. d. Risk premium to equal one. e. Portfolio standard deviation to equal one.
Consider a risky portfolio. The end-of-year cash flow derived from the portfolio will be either $50,000...
Consider a risky portfolio. The end-of-year cash flow derived from the portfolio will be either $50,000 or $150,000, with equal probabilities of 0.5. The alternative riskless investment in T-bills pays 5%. a. If you require a risk premium of 10%, how much will you be willing to pay for the portfolio? (Round your answer to the nearest dollar amount.) b. Suppose the portfolio can be purchased for the amount you found in (a). What will the expected rate of return...
Consider a risky portfolio. The end-of-year cash flow derived from the portfolio will be either $40,000...
Consider a risky portfolio. The end-of-year cash flow derived from the portfolio will be either $40,000 or $125,000, with equal probabilities of 0.5. The alternative riskless investment in T-bills pays 6%. a. If you require a risk premium of 8%, how much will you be willing to pay for the portfolio? (Round your answer to the nearest dollar amount.) b. Suppose the portfolio can be purchased for the amount you found in (a). What will the expected rate of return...
Consider a risky portfolio. The end-of-year cash flow derived from the portfolio will be either $60,000...
Consider a risky portfolio. The end-of-year cash flow derived from the portfolio will be either $60,000 or $160,000, with equal probabilities of 0.5. The alternative riskless investment in T-bills pays 5%. a. If you require a risk premium of 8%, how much will you be willing to pay for the portfolio? (Round your answer to the nearest dollar amount.) Value of the Portfolio b. Suppose the portfolio can be purchased for the amount you found in (a). What will the...
Value at Risk for a given risky portfolio is defined as: The underlying volatility of the...
Value at Risk for a given risky portfolio is defined as: The underlying volatility of the equity portfolio. The maximum loss that can be experienced in the risky portfolio over a specified holding period. The worst case loss that can be experienced in the risky portfolio given a certain level of probability. The regulatory capital needed to cover the underlying risk in the equity portfolio. None of the above.
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% ...
questions 29-32 please
29. What strategy could be considered insurance for an investment in a portfolio of stocks? A. Covered call B. Protective put C. Short put D. Straddle E. None of the above 30. Why is the buyer of an option not required to post margin under the Option Clearing Corporation rules? A. Once an option is purchased, no further money is at risk B. The writer pays all the costs C. The credit worthiness of the buyer covers...
A and B
thank you !!
10. Consider a risky portfolio. The end-of-year cash flow derived from the portfolio will be either $10,000 or $20,000, with equal probabilities of 0.5. The alternative riskless investment in T-bills pays 2% per year. a. What is the expected cash flow from the risky portfolio? Answer: $ Show your calculation here. b. If you require a risk premium of 6% per year, how much are you willing to pay now to buy the risky...
Investment securities portfolio help to offset credit risk exposure means: a. High-quality securities can be purchased and held to balance out the risk from loans. b. Their price can never go down. c. They will never default. d. They are protected against interest rates change. 13. Function(s) of a bank's security portfolio is (are) to: a. Increase tax exposure. b. Increase credit risk exposure. c. Provide a back-up source of liquidity. d. All of the above. 14. When interest rates...
Theoretically, a risk-free portfolio could be created by combining risky securities in a manner that caused the: Select one: a. Nondiversifiable risk to be eliminated. b. Portfolio beta to equal zero. O c. Expected return of the portfolio to equal the market expected return. d. Risk premium to equal one. e. Portfolio standard deviation to equal one.
Consider a risky portfolio. The end-of-year cash flow derived from the portfolio will be either $60,000 or $160,000, with equal probabilities of 0.5. The alternative riskless investment in T-bills pays 5%. a. If you require a risk premium of 8%, how much will you be willing to pay for the portfolio? (Round your answer to the nearest dollar amount.) Value of the Portfolio b. Suppose the portfolio can be purchased for the amount you found in (a). What will the...
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