# Question

In Problem 5, assume a riskless rate of 10%. What is the optimal investment?

In Problem 5

For the two securities shown, plot all combinations of the two securities in

space. Assume p = 1, -1, 0. For each correlation coefficient, what is the combination that yields the minimum σp and what is that σp? Assume no short selling.

In Problem 5

For the two securities shown, plot all combinations of the two securities in

space. Assume p = 1, -1, 0. For each correlation coefficient, what is the combination that yields the minimum σp and what is that σp? Assume no short selling.

## Answer to relevant Questions

Assume analysts provide the following types of information. Assume (standard definition) short sales are allowed. What is the optimum portfolio if the lending and borrowing rate is 5%? Monthly return data are presented below for each of three stocks and the S&P index (corrected for dividends) for a 12-month period. Calculate the following quantities: - Alpha for each stock - Beta for each stock - The ...Suppose Forecast each security’s beta using the Vasicek technique. Given the multi-index model Where I*1 and I*2 are correlated, and given the regression equation I*2 = 1 + 1.3I1 + dt, transform the equation for Ri into one with orthogonal indexes. Consider the following two investments. Which is preferred if the utility function is U(W) = -W - 0.04W2?Post your question

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