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At the end of the current year, an investor wants to make a donation of $20,000 to charity but does not want the year-end market
At the end of the current year, an investor wants to make a donation of $20,000 to charity but does not want the year-end market value of her portfolio to fall below$600,000. If the shortfall level is equal to the risk-free rate of return and returns from all portfolios considered are normally distributed, will the portfolio that minimizes the probability of failing to achieve the investor's objective most likely have the:
Highest safety-first ratio? | Highest Sharpe ratio? |
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A | No | Yes | |
B | Yes | No | |
C | Yes | Yes
(Select the best answer below.) A B C
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