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Please help me solve this question please! Thank you! 2.A.2 Optimal Risky Portfolio and Complete Portfolio Consider the optimal risky and optimal complete portfolio in
Please help me solve this question please! Thank you!
2.A.2 Optimal Risky Portfolio and Complete Portfolio Consider the optimal risky and optimal complete portfolio in slide 20 of Week 2-1 lecture slides. Suppose risk free rate has decreased from 5% to 1%, and the investor wants to maintain the same utility level under the new risk-free rate. If the investor could extend their opportunity set of risky assets, what would be the characteristics of the risky assets now included in the extended opportunity set. Explain and show in the figure. 2.A.2 Optimal Risky Portfolio and Complete Portfolio Consider the optimal risky and optimal complete portfolio in slide 20 of Week 2-1 lecture slides. Suppose risk free rate has decreased from 5% to 1%, and the investor wants to maintain the same utility level under the new risk-free rate. If the investor could extend their opportunity set of risky assets, what would be the characteristics of the risky assets now included in the extended opportunity set. Explain and show in the figure Step by Step Solution
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