# Question: Assume that you expect that the average return on a

Assume that you expect that the average return on a security in various markets is as shown in the following table. Assume further that the historical correlation coefficients shown in Table 12.1 are a reasonable estimate of future correlation coefficients.

Finally, assume the standard deviations shown in Table. Which markets are attractive investments for an American investor if the riskless lending and borrowing rate is 6%?

Finally, assume the standard deviations shown in Table. Which markets are attractive investments for an American investor if the riskless lending and borrowing rate is 6%?

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Consider the following returns: What is the average return in each market from the point of view of a U.S. investor and of a U.K. investor? Assume that the following assets are correctly priced according to the security market line. Derive the security market line. What is the expected return on an asset with a beta of 2? If the following assets are correctly priced on the security market line, what is the return of the market portfolio? What is the risk-free rate? If (R-bar)M = 15% and RF = 5% and risk-free lending is allowed but riskless borrowing is not, sketch what the efficient frontier might look like in expected return standard deviation space. Sketch the security market line ...Referring to the results of Problem 1, illustrate the arbitrage opportunities that would exist if a portfolio called D with the following properties were observed:Post your question