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I know the answer can not be D. Thanks for the help Suppose that you are appointed as a tenured professor and have a riskless
I know the answer can not be D. Thanks for the help
Suppose that you are appointed as a tenured professor and have a riskless stream of income with a present value of $2 million. The value of your current financial wealth in your savings account is $6 million. You are deciding a portfolio allocation between an S\&P 500 index fund and Treasury bills for your financial portfolio. You are a mean-variance investor with a risk aversion of 8. The S\&P 500 index fund's Sharpe ratio is 0.54 and its volatility is 22%. Which fraction of your financial wealth do you optimally invest in the S\&P 500 index fund? A. 59.09% B. 40.91% C. 70.25% D. 29.75%Step by Step Solution
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