2017 2018 2019 2020 Using the data below only, answer the following questions. Show your work....
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2017 2018 2019 2020 Using the data below only, answer the following questions. Show your work. Long-term Data: E(R) Standard Deviation Portfolio D -25% 10% 10% 25% 20% 30% Portfolio W -15% 10% 5% 10% 12% 15% Assume that you invested $100 in both Portfolios D and W above in the beginning of 2017. What is the dollar value of each portfolio at the end of 2019 and 2020? Calculate the arithmetic and geometric mean returns for portfolio D over the 4 years listed above (2017-2020) Using a risk-free rate of 2% and the long-term data above, what are the Sharpe ratios for Portfolio D and W? Portfolio D has an expected return E(R) that is much higher than Portfolio W based on long-term data. Why might you recommend Portfolio W as an investment to a client over Portfolio D? Upon recommending Portfolio W to your client instead of Portfolio D, they say, "I am not concerned with the 2017 under performance of Portfolio D. At the time Portfolio D was exposed to much more unsystematic risk than it has in the portfolio today". What is unsystematic risk? List a possible example for Portfolio D. 2017 2018 2019 2020 Using the data below only, answer the following questions. Show your work. Long-term Data: E(R) Standard Deviation Portfolio D -25% 10% 10% 25% 20% 30% Portfolio W -15% 10% 5% 10% 12% 15% Assume that you invested $100 in both Portfolios D and W above in the beginning of 2017. What is the dollar value of each portfolio at the end of 2019 and 2020? Calculate the arithmetic and geometric mean returns for portfolio D over the 4 years listed above (2017-2020) Using a risk-free rate of 2% and the long-term data above, what are the Sharpe ratios for Portfolio D and W? Portfolio D has an expected return E(R) that is much higher than Portfolio W based on long-term data. Why might you recommend Portfolio W as an investment to a client over Portfolio D? Upon recommending Portfolio W to your client instead of Portfolio D, they say, "I am not concerned with the 2017 under performance of Portfolio D. At the time Portfolio D was exposed to much more unsystematic risk than it has in the portfolio today". What is unsystematic risk? List a possible example for Portfolio D.
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To calculate the dollar value of each portfolio at the end of 2019 and 2020 we can use the following ... View the full answer
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date:
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