Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Suppose that you have found the optimal risky combination using all risky assets available in the economy, and that this optimal risky portfolio has an
Suppose that you have found the optimal risky combination using all risky assets available in the economy, and that this optimal risky portfolio has an expected return of 0.2 and standard deviation of 0.2 . The T-bill rate is 0.04 . If your risk-return preferences are best described by the utility function in this class, with a riskaversion coefficient of 2.4. What is the expected return on your optimal complete portfolio? Round your answer to 4 decimal places. For example if your answer is 3.205%, then please write down 0.0321 . Question 12 1 pts Suppose that you have found the optimal risky combination using all risky assets available in the economy, and that this optimal risky portfolio has an expected return of 0.11 and standard deviation of 0.28 . The T-bill rate is 0.05 . What fraction of your money must be invested in the risk-free asset in order to form a complete portfolio with an expected return of 0.09 ? Round your answer to 4 decimal places. For example, if your answer is 3.205%, then please write down 0.0321
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