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5.c. If production grows by 3% over the next year, the default spread falls to 2.75%, and the term spread does exactly what the market
5.c. If production grows by 3% over the next year, the default spread falls to 2.75%, and the term spread does exactly what the market expects, what will be the return on the portfolio A? (1 point) return on the portfolio A PLEASE REPORT YOUR ANSWER HERE 5.d. Assume you are using the same original factors (1.e. same economy). You are considering investing in an actively managed fund ChigaBiga. The residual standard deviation echigabiga: 0(e= 11%. The real return-generating process ChigaBiga ChigaBiga=0.08 +2 fi. Chigadiga + f2.Chigabiga 0.4f3.chiqadiga + echigabiga What's the equilibrium expected return for ChigaBiga based on its risk exposure? (1 point) for 15: PLEASE REPORT YOUR ANSWER HERE expected return of ChigaBiga 5.e. According to your calculation in 5.d., you should: (1 point) A. Buy ChigaBiga because it is overpriced B. Sell ChigaBiga because it is overpriced C. Buy ChigaBiga because it is underpriced D. Sell ChigaBiga because it is underpriced 5.c. If production grows by 3% over the next year, the default spread falls to 2.75%, and the term spread does exactly what the market expects, what will be the return on the portfolio A? (1 point) return on the portfolio A PLEASE REPORT YOUR ANSWER HERE 5.d. Assume you are using the same original factors (1.e. same economy). You are considering investing in an actively managed fund ChigaBiga. The residual standard deviation echigabiga: 0(e= 11%. The real return-generating process ChigaBiga ChigaBiga=0.08 +2 fi. Chigadiga + f2.Chigabiga 0.4f3.chiqadiga + echigabiga What's the equilibrium expected return for ChigaBiga based on its risk exposure? (1 point) for 15: PLEASE REPORT YOUR ANSWER HERE expected return of ChigaBiga 5.e. According to your calculation in 5.d., you should: (1 point) A. Buy ChigaBiga because it is overpriced B. Sell ChigaBiga because it is overpriced C. Buy ChigaBiga because it is underpriced D. Sell ChigaBiga because it is underpriced
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