Answered step by step
Verified Expert Solution
Question
1 Approved Answer
i need letter B. question Refer the table below on the average excess return of the U.S. equity market and the standard deviation of that
i need letter B. question
Refer the table below on the average excess return of the U.S. equity market and the standard deviation of that excess return. Suppose that the U.S. market is your risky portfolio. a. If your risk-aversion coefficient is A=4.9 and you betieve that the entice 19272018 period is representative of future expected performance, what fraction of your portfolio should be allocated to T-bilis and what fraction to equity? Assume your utility function is E(r)=0.5Aa2, (Do not round intermediate calculations. Round your answers to 2 decimal places.) b. If your tisk aversion coefficient is A4.9 and you believe that the entire 1973-1995 period is representative of future cxpected performance, what fraction of your portfollo should be allocated to T bills and what fraction to cquity? (Do not round intermediote colculotions. Round your answers to 2 decimal places.) Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started