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D Question 10 1 pts A 2-asset portfolio has the parameters 0.16 -0.04 r = (0:28) 0.10 0.25 S = (-0.6 7 -0.04 0.01 Which

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D Question 10 1 pts A 2-asset portfolio has the parameters 0.16 -0.04 r = (0:28) 0.10 0.25 S = (-0.6 7 -0.04 0.01 Which of the following is necessarily true? O There is a risk-free portfolio which does not require short-selling O There is a risk-free portfolio which requires short-selling of asset 1 O There is a risk-free portfolio which requires short-selling of asset 2 O The Efficient Frontier is part of a hyperbola The Minimum Risk Portfolio has po = 0.2 and 00 = 0.1 Question 7 1 pts A six-sided dice numbered one to six is thrown twice; the player wins $50 if the sum of the throws equals exactly 7, loses $50 if the sum of the throws equals exactly 2 or 12 and receives $1 otherwise. Assuming the dice is fair and each throw is independent, what is the fair price for an opportunity to play this game? $2.55 $6.33 $11.67 $3.90 None of the above Question 8 1 pts U(x) = 1 -e-2/a where X represents a potential payoff. She is invited to appear on a game show. If she decides to participate in the game show, she will have a 40% chance of winning an amount X1 or a 60% chance of losing X2 . If however, she decides not to participate in the game show, she will be given an amount of cash to compensate her for her time. Using the Principle of Expected Utility, determine the minimum amount of cash C she would have to be offered to dissuade her from participating in the game show. C= 0.4x1 0.6x2 C = -a[1-(6x2/a) + (4x1/a) 1] foa(1 ez/a) + 16 a(1 e-#1/a) C=-a ln ( ez/a + fe-01/0) C = a In 2 - hema/a - 4e-21/2

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