Assume you have income of $5,000 in each of two periods and can lend at 10% but pay 20% on borrowing. What is your opportunity set?
Answer to relevant QuestionsAssume your preference function P is P = C1 + C2 + C1C2. Plot the location of all points with P = 50, P = 100. Assume the borrowing rate is 10% and the lending rate is 5%. Also assume your income is $100 in each period. What is the maximum you can consume in each period? What is the opportunity set? Return to the example presented in Problem 1, Chapter 4. A. Assuming short selling is not allowed: (1) For securities 1 and 2, find the composition, standard deviation, and expected return of the portfolio that has minimum ...Assume the information given in Problem 1 but that short sales are not allowed. Set up the formulation necessary to solve the portfolio problem. In Problem 1 Using Blume’s technique, where βi2 = 0.343 + 0.677βi1, calculate βi2 for the securities in Problem 5. In Problem 5
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