Suppose that you live on an island where you have available to you only two assets and
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Suppose that you live on an island where you have available to you only two assets and $10,000 to invest . A risk free asset that yields 7% return and a risky asset that yields an average return of 18% with a standard deviation of 30%. [SHOW ALL YOUR WORK. ]
A. How much will you invest in the RISKY asset, if you want to earn a return of 15% ?
B. What is the standard deviation of the portfolio you created in step A above?
Related Book For
Fundamentals of Corporate Finance
ISBN: 978-0133400694
1st canadian edition
Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford, David A. Stangeland, Andras Marosi
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