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Please show how to work out Daniel Macchio and Victoria Leeke each have $10,000 available to invest in the market. Dan has formed a portfolio
Please show how to work out
Daniel Macchio and Victoria Leeke each have $10,000 available to invest in the market. Dan has formed a portfolio where he has invested half his funds in the riskfree security and the remaining funds in the market portfolio. Vicky has formed a portfolio by borrowing $5,000 at the riskfree rate and investing all the available funds in the market portfolio. What can you say about the relative standard deviation of
returns of their portfolios? Vickys portfolios standard deviation of returns will be:
a) One half the standard deviation of returns of Dans portfolio.
b) One and a half times the standard deviation of returns of Dans portfolio.
c) Three times the standard deviation of returns of Dans portfolio.
d) None of the above.
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