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a . What alternative investment has the lowest possible volatility while having the same expected return as Amazon? To create an alternative investment that has
a What alternative investment has the lowest possible volatility while having the same expected return as Amazon?
To create an alternative investment that has the lowest possible volatility while having the same expected return as Amazon, we use the
following strategy:
Sell:
$ worth of Amazon stock. Round to the nearest dollar.
Borrow: $ at the riskfree rate. Round to the nearest dollar.
Buy: $ worth of the market portfolio. Round to the nearest dollar.
Buy: $ worth of the riskfree investment. Round to the nearest dollar.
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