Question
Consider a risk-free security with return R = 5%. Consider also three risky portfolios A, B and C with expected returns 15%, 20%, and 25%,
Consider a risk-free security with return R = 5%. Consider also three risky portfolios A, B and C with expected returns 15%, 20%, and 25%, respectively, and standard deviations 5%, 10%, and 14%, respectively. Suppose that you can invest in the risk-free security and only one of the portfolios. Which portfolio (among the three of them) would you select?
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Public Finance and Public Policy
Authors: Jonathan Gruber
5th edition
1464143331, 978-1464143335
