1. Carl, a risk averse investor, wants to construct a portfolio using both risk free and risky assets. He has gathered the following information about 2 risky assets Y and Z, Which of these 2 assets would he choose to add to his portfolio? *

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a. Asset Y only

b. Asset Z only

c. He is indifferent. He may choose either Asset Y or Asset Z

d. He should choose both assets

e. He shouldnt choose any of these 2 assets

3. Consider the following two risky portfolios: *

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a. $75,614.37; $78,638.94

b. $84,408.73; $87,343.87

c. $87,343.87; $90,837.63

d. $81,162.24; $84,408.73

e. None of the above

7. Given the following information about Triple D bond, determine the duration of this bond. *

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a. 10.11 years

b. 8.08 years

c. 9.02 years

d. 7.46 years

e. None of the above

3. Consider the following two risky portfolios: * Portfolios Cash Flow at year 2 Probability $80.000 40% Portfolio A $120,000 60% $75,000 50% Portfolio B $125,000 50% Mr. Johns, a portfolio investor, expects a retum of 11%. Assume that risk-free rate is 4% Mr. Johns is willing to pay for portfolios B and A respectively: O a. $75,614.37; $78,638.94 O b. $84,408.73; $87,343.87 c. $87,343.87; $90,837.63 O d. $81,162.24; $84,408.73 O e. None of the above 7. Given the following information about Triple D bond, determine the duration of this bond. * $1,050 Current Market Value Current yield-to-maturity Market Value if the yield increases by 25 basis points 6% $1.030 a. 10.11 years O b. 8.08 years c. 9.02 years d. 7.46 years O e. None of the above 1. Carl, a risk averse investor, wants to construct a portfolio using both risk free and risky assets. He has gathered the following information about 2 risky assets Y and Z, Which of these 2 assets would he choose to add to his portfolio? * Asset Y Z Expected Return Reward-to-volatility 15% 20% 0.3 0.4 a. Asset Y only b. Asset Z only c. He is indifferent. He may choose either Asset Y or Asset Z d. He should choose both assets e. He shouldn't choose any of these 2 assets