Question
PLEASE SHOW ALL WORK AND ANSWER ALL QUESTIONS FOLLOWING: For the following 5 questions: You invest $100 in a risky asset with an expected rate
PLEASE SHOW ALL WORK AND ANSWER ALL QUESTIONS FOLLOWING:
For the following 5 questions: You invest $100 in a risky asset with an expected rate of return of 15% and a standard deviation of 15% and a T-bill with a rate of return of 5% and E (U)= E(r) - 0.5A2
10. What percentages of your money must be invested in the risky asset and the risk-free asset, respectively, to form a portfolio with an expected return of 13%?
A) 20% and 80%
B) 25% and 75%
C) 80% and 20%
D) 75% and 25%
11. What percentages of your money must be invested in the risk-free asset and the risky asset, respectively, to form a portfolio with a standard deviation of 8%?
A) 67% and 33%
B) 53% and 47%
C) 27% and 73%
D) 47% and 53%
12. A portfolio that has an expected outcome of $123 is formed by
A) borrowing $40 at the risk-free rate and investing the total amount ($140) in the risky asset.
B) borrowing $80 at the risk-free rate and investing the total amount ($180) in the risky asset.
C) borrowing $60 at the risk-free rate and investing the total amount ($160) in the risky asset.
D) borrowing $85 at the risk-free rate and investing the total amount ($185) in the risky asset.
13. The slope of the CAL formed with the risky asset and the risk-free asset is equal to
A) 0.5667.
B) 0.6667.
C) 0.7667
D) 0.4667.
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