Differentiate the money market from the capital market. Your answer must include: a review of their key
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Question:
Differentiate the money market from the capital market.
Your answer must include:
- a review of their key characteristics
- provide a minimum of 2 financial instruments in each market.
- Save First Investment Fund Ltd plans to create a portfolio comprising company X and Y shares. The following information relates to these shares.
| X | Y | |
| Expected return | 10% | 15% |
| Standard Deviation of return | 20% | 40% |
| Correlation of coefficient | 0.5 |
Required:
- Calculate the expected return of the portfolio by combining 75% of the shares from Company X with the remaining shares from Company Y.
- Determine the risk of the portfolio given this combination
Expert Answer:
The money market and the capital market are two distinct segments of the financial market that serve different purposes and have different characteristics Heres a brief explanation of each market Mone... View the full answer
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