Question
1a. an investor invests 40% of her wealth in a risky asset with an expected rate of return of 10% and a standard deviation of
1a. an investor invests 40% of her wealth in a risky asset with an expected rate of return of 10% and a standard deviation of 28% and she puts 60% in a treasury bill (the risk-free asset) that pays 5%. her portfolio's expected rate of return and standard deviation are _____ and ______ respectively.
a. 8.2;6.7%
b. 5.6;22.4%
c. 7%; 22.13%
d. 7%; 11.2%
1b. which of the following loans is the most expensive?
loan x: APR=10% compunded monthly
loan y: APR=10.2% compounded quarterly
loan z: APR=10.1% compounded semi-annually
a. loan x
v. loan y
c. loan z
d. they are all equally expensive
1c. brian and sara have the same level of risk aversion. both investors form their complete portfolios out of a risk free asset and a risky portfolio. brian's complete portfolio is worth $1000 and sara's complete portfolio is worth $2000. which of the following portfolios could be their optimal complete portfolios?
a. brian invests $600 in the risky portfolio and sara invests $800 in the risky portfolio.
b. brian invests $500 in the risky portfolio and sara invests $1000 in the risky portfolio.
c. brian invests $400 in the risky portfolio and sara invests $600 in the risky portfolio.
d. brian invests $0 and sara invests $200 in the risky portfolio.
1d. which of the following statements is true?
a. two assets with the same expected return should have the same sharpe ratio
b. the capital allocation line in a parabola.
c. all portfolios lying on the capital allocation line have the same sharpe ratio.
d. sharpe ratio is the portfolio's risk premium.
1e. you invest $10,00 in a complete portfolio. the complete portfolio is composed of a risky asset with an expected rate of return of 15% and a standard deviation of 20% and a treasury bill with a rate of return of 5%. how much money should be invested in the risky asset to form a complete portfolio with a return standard deviation of 25%?
a. $8000
b. $15000
c.$7000
d. $12500
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