24. Investments A and B both offer an expected rate of return of 12. The standard...
24. Investments A and B both offer an expected rate of return of 12. The standard deviation of A is 30% and that of B is 20%. If an investor wishes to invest in either A or B, then the investor should
A. prefer a portfolio including both A and B.
B. prefer B to A.
- prefer A to B
- prefer the risk-free asset
- The answer cannot be determined without knowing investors' risk preferences.
Homework Answers
It depends on correlation between A and B but the investor should prefer a portfolio including both A and B
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24. Investments A and B both offer an
expected rate of return of 12. The standard...
You manage a risky portfolio with an expected return of 12% and a standard deviation of 24%. Assume that you can invest...
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Consider a portfolio that offers an expected rate of return of 10% and a standard deviation of 24%. T-bills offer a risk-free 6% rate of return. What is the maximum level of risk aversion for which the risky portfolio is still preferred to T-bills?
3) Assume that you manage a risky portfolio with an expected rate of return of 14%...
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answer all. For the next question, assume an investor with the following utility function U-E)-3/2) 12. To maximize her expected uility, she would choose the set with an espect rate of return of...
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