Question
Jeremy has $10k USD to invest and would like to hear your suggestions. You have provided him a complete portfolio investment plan. The complete portfolio
Jeremy has $10k USD to invest and would like to hear your suggestions. You have provided him a complete portfolio investment plan. The complete portfolio is composed by a risky portfolio with return of 10.5% and standard-deviation of 15%, and a risk-free asset with return equals to X% (X is the third-digital number of your student ID. Say you have a student ID of 278123A, and the risk-free rate of return is then 8%. If the third-digital number is 0, then rf is 0). After comparison between these two choices, Jeremy prefers the risk-free option. a), Determine the minimum value of Jeremy's risk-aversion factor. Keep 3 decimals in your answer. Jeremy has $10k USD to invest and would like to hear your suggestions. You have provided him a complete portfolio investment plan. The complete portfolio is composed by a risky portfolio with return of 10.5% and standard-deviation of 15%, and a risk-free asset with return equals to X% (X is the third-digital number of your student ID. Say you have a student ID of 278123A, and the risk-free rate of return is then 8%. If the third-digital number is 0, then rf is 0). After comparison between these two choices, Jeremy prefers the risk-free option.
a), Determine the minimum value of Jeremy's risk-aversion factor. Keep 3 decimals in your answer. [2 marks]
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