Question
If a risky asset has a standard deviation of 12%, the risk free rate is 4%, and your degree of risk aversion (A) is 3,
If a risky asset has a standard deviation of 12%, the risk free rate is 4%, and your degree of risk aversion (A) is 3, what should be the assets expected rate of return in order for you to consider it over the risk free asset? [Hint: Use the certainty equivalent equation]
| 4.0% | ||
| 6.16% | ||
| 4.18% | ||
| 4.4% |
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Personal Finance
Authors: Jack Kapoor, Les Dlabay, Robert Hughes
10th Edition
0073530697, 9780073530697
