Question
a . 1- What is the expected return of investing equally in all three assets M, N, and O? % (Round to two decimal places.)
a. 1- What is the expected return of investing equally in all three assets M, N, and O?
% (Round to two decimal places.)
2-What is the expected return of investing in asset M alone?
% (Round to two decimal places.)
3-What is the standard deviation of the portfolio that invests equally in all three assets M, N, and O?
% (Round to two decimal places.)
4-What is the standard deviation of asset M?
% (Round to two decimal places.)
5- By investing in the portfolio that invests equally in all three assets M, N, and O rather than asset M alone, Sally can benefit by increasing her return by (........ %) and decrease her risk by( (....... %). (Round to two decimal places.)
b. 1- What is the expected return of a portfolio of 50% asset M and 50% asset N?
% (Round to two decimal places.)
2- What is the expected return of a portfolio of 50% asset M and 50% asset O?
% (Round to two decimal places.)
3- What is the expected return of a portfolio of 50% asset N and 50% asset O?
% (Round to two decimal places.)
4- What is the standard deviation of a portfolio of 50% asset M and 50% asset N?
% (Round to two decimal places.)
5- What is the standard deviation of a portfolio of 50% asset M and 50% asset O?
% (Round to two decimal places.)
6- What is the standard deviation of a portfolio of 50% asset N and 50% asset O?
% (Round to two decimal places.)
7- Could Sally reduce her total risk even more by using assets M and N only, assets M and O only, or assets N and O only? (Select the best response.)
A. No, none of the portfolios using a 50-50 split reduce risk.
B. Yes, a portfolio of 50% of asset M and 50% of asset N could reduce the risk to 1.49%.
C. There is not enough information to answer this question.
D. Yes, a portfolio of 50% of asset M and 50% of asset O could reduce the risk to 1.49%.
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