Question
Treasury bills are paying a 4% rate of return. A risk-averse investor with a risk aversion of A = 3 should invest entirely in a
Treasury bills are paying a 4% rate of return. A risk-averse investor with a risk aversion ofA= 3 should invest entirely in a risky portfolio with a standard deviation of 24% only if the risky portfolio's expected return is at least ______.
The correct answer is 12.64%. Please explain and show all the formulas. Also, please explain why y=0.5.
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Practical Financial Management
Authors: William R. Lasher
8th edition
1305637542, 978-1305887237, 1305887239, 978-1305637542
