In a portfolio of many securities, all having positive correlation with each other, is it possible for
Question:
In a portfolio of many securities, all having positive correlation with each other, is it possible for the minimum variance portfolio to have zero risk? What happens to the efficient frontier when a risk-free asset exists?
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 50% (2 reviews)
No it is not possible for the minimum variance portfolio to have zero risk in a portfolio of many securities with positive correlation The reason is t...View the full answer
Answered By
Joseph Mwaura
I have been teaching college students in various subjects for 9 years now. Besides, I have been tutoring online with several tutoring companies from 2010 to date. The 9 years of experience as a tutor has enabled me to develop multiple tutoring skills and see thousands of students excel in their education and in life after school which gives me much pleasure. I have assisted students in essay writing and in doing academic research and this has helped me be well versed with the various writing styles such as APA, MLA, Chicago/ Turabian, Harvard. I am always ready to handle work at any hour and in any way as students specify. In my tutoring journey, excellence has always been my guiding standard.
4.00+
1+ Reviews
10+ Question Solved
Related Book For
Corporate Finance
ISBN: 9780077173630
3rd Edition
Authors: David Hillier, Stephen A. Ross, Randolph W. Westerfield, Bradford D. Jordan, Jeffrey F. Jaffe
Question Posted:
Students also viewed these Business questions
-
Question Data Case for Chapter 11: Optimal Portfolio Choice and the Capital Asset Pricing Model Your manager was so impressed with your work analyzing the return and standard deviations of the 12...
-
Suppose that an investor selects companies; A and B from the Johannesburg stock exchange. He observes that for the past ten years company A yielded an average investment return that is twice that of...
-
Selling price Variable costs: Direct materials Direct labour Variable manufacturing overhead Total variable cost Contribution margin Contribution margin ratio Contribution margin per labour hour O...
-
Identify the major laws and regulations affecting health care organizations. Why is the health care industry so heavily regulated? What are the central goals of these laws and regulations? Who...
-
Use conditional proof and the eighteen rules of inference to derive the conclusions of the following symbolized arguments. Having done so, attempt to derive the conclusions without using conditional...
-
Derive equation (4.1) for the total sample of the two-sample t-test. Data from Equation 4.1 n = 2 40 (21-a/2 + 21-3)
-
Affordable Lawn Care, Inc., provides lawn-mowing services to both commercial and residential customers. The company performs adjusting entries on a monthly basis, whereas closing entries are prepared...
-
A new employee at an organization has trouble accurately filling out the forms they are required to complete for her/his job. It would be correct to say this is caused by a lack of motivation and...
-
Assume that every asset has the same expected return and variance. Furthermore, all assets have the same covariance with each other. As the number of assets in the portfolio grows, which becomes more...
-
What is a minimum variance portfolio? In a world with only two assets, is it possible to have two portfolios with the same risk but different expected return? Explain your answer using a practical...
-
The equivalent-circuit parameters of an 8-kW, 230-V, 60-Hz, four-pole, two-phase, squirrel-cage induction motor in ohms per phase are Rl = 0.253 Xl = 1.14 Xm = 32.7 R2 = 0.446 X2 = 1.30. This motor...
-
A gas station owner suspects that he is being overcharged for gasoline deliveries by a gasoline supplier. The overcharge seems particularly high in the summer months. The owner hires an attorney, who...
-
A sled with a daring rider has a combined mass of 150 kg. The sled and rider have an ini;al speed of 22.5 m/s on an icy horizontal surface at ground level and then travel over a smooth, icy 11 m high...
-
You are sitting approximately 1.50 m from a straight current carrying wire in the wall. How much current would the wire have to carry to produce a field of the same magnitude as the Earth's magnetic...
-
A moose pulls a 172-kg sled across a flat surface. The moose is connected to the sled by a rope that is angled 28.5 degrees from the horizontal direction, and the moose creates a constant tension of...
-
The horizontal constricted pipe illustrated in the figure (a Venturi tube), can be used to measure flow velocities in an incompressible fluid. P V P 2 V The ratio for the cross section areas of the...
-
The following account balances are taken from the records of Martin Corp. for the past two years. Other information available for 2010 is as follows: a. Net income for the year was $200,000. b....
-
Explain the Hawthorne effect.
-
Consider the following capital rationing problem: Set up this problem as a linear program. NPV Project Co C2 -10,000 -10,000 +6,700 +9,000 -20,000 +5,000 +5,000 +5,000 +5,000 +4,000 -15,000 -1,500...
-
Some people believe firmly, even passionately, that ranking projects on IRR is OK if each projects cash flows can be reinvested at the projects IRR. They also say that the NPV rule assumes that cash...
-
Look again at the project cash flows in Practice Question 6. Calculate the modified IRR as defined in footnote 5 in Section 5.3. Assume the cost of capital is 12 percent. Now try the following...
-
success, not personal relationships. Over the years, he struggled to convert all his father's old, handwritten records to electronic files. Eventually, he installed a completely computerized informa-...
-
Unix operating system What command would you use to list all files that have "en" and are a .h? Which command is used to list files and directories in a Unix-like operating system? Which Linux...
-
According to Management Study Guide (2022), a global virtual team leader should have high levels of techno-socio-emotional capabilities and should be able to strike a perfect balance between the...
Study smarter with the SolutionInn App