a. John Wilson is a portfolio manager at Austin & Associates. For all of his clients, Wilson

Question:

a. John Wilson is a manager at Austin & Associates. For all of his clients, Wilson manages portfolios that lie on the Markowitz efficient frontier. Wilson asks Mary Regan, CFA, a managing director at Austin, to review the portfolios of two of his clients, the Eagle Manufacturing Company and the Rainbow Life Insurance Co. The expected returns of the two portfolios are substantially different. Regan determines that the Rainbow is virtually identical to the market and concludes that the Rainbow must be superior to the Eagle Do you agree or disagree with Regan’s conclusion that the Rainbow is superior to the Eagle Justify your response with reference to the capital market line.
b. Wilson remarks that the Rainbow has a higher because it has greater nonsystematic risk than Eagle’s Define nonsystematic risk and explain why you agree or disagree with Wilson’s remark.

Expected Return
The expected return is the profit or loss an investor anticipates on an investment that has known or anticipated rates of return (RoR). It is calculated by multiplying potential outcomes by the chances of them occurring and then totaling these... Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...