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Investors can choose to purchase either a risky portfolio or a riskless T - bill. The T - bill costs $ 9 5 today and
Investors can choose to purchase either a risky portfolio or a riskless Tbill. The Tbill costs $ today and will be worth $ at the end of the year. The risky portfolio costs $ today. If the economy does well, which occurs with probability the risky portfolio will be worth $ at the end of the year. If the economy just treads water, which occurs with probability the risky portfolio will be worth $ at the end of the year. If the economy does poorly, which occurs with probability the risky portfolio will be worth $ at the end of the year. Use scenario analysis to calculate the Sharpe ratio of this portfolio. SHOW WORK!
Investors can choose to purchase either a risky portfolio or a riskless Tbill. The Tbill costs
$ today and will be worth $ at the end of the year. The risky portfolio costs $ today. If
the economy does well, which occurs with probability the risky portfolio will be worth $
at the end of the year. If the economy just treads water, which occurs with probability the
risky portfolio will be worth $ at the end of the year. If the economy does poorly, which
occurs with probability the risky portfolio will be worth $ at the end of the year. Use
scenario analysis to calculate the Sharpe ratio of this portfolio. SHOW WORK!
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