You have 1.500.000 kr that you will invest in a portfolio of shares. You can choose...
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You have 1.500.000 kr that you will invest in a portfolio of shares. You can choose a combination of the companies A, B, C with price PA = 100 kr, PB = 125 kr and pc = 284 kr per share at the time when you invest. We assume that at a given time in the future, one of three scenarios will happen, and the prices for the shares in these scenarios are given in the table below. We write x, y, z for Cost Scenario 1 Scenario 2 Scenario 3 Price A Price B Price C 100 125 284 75 150 120 150 50 140 134 404 304 the number of shares you buy in each of the three companies, and we assume that x,y,z can be any real numbers. This means that we allow buying a negative number of shares (short selling), and the number of shares does not need to be an integer. (a) We write R₁, R2 og Rs for the return of the portfolio in the three scenarios. Is it possible to choose a portfolio with (R₁, R₂, R3) = (1.000.000,-2.000.000, 200.000)? If so, how many shares do we need to buy of each of the three companies? (b) Determine all triples (R₁,R₂,R3) of possible returns in the three scenarios. Are there any portfolios with R₁, R2, R3> 0 (positive return in any scenario)? If so, specify one such portfolio (the number of shares in each company, and the corresponding returns). You have 1.500.000 kr that you will invest in a portfolio of shares. You can choose a combination of the companies A, B, C with price PA = 100 kr, PB = 125 kr and pc = 284 kr per share at the time when you invest. We assume that at a given time in the future, one of three scenarios will happen, and the prices for the shares in these scenarios are given in the table below. We write x, y, z for Cost Scenario 1 Scenario 2 Scenario 3 Price A Price B Price C 100 125 284 75 150 120 150 50 140 134 404 304 the number of shares you buy in each of the three companies, and we assume that x,y,z can be any real numbers. This means that we allow buying a negative number of shares (short selling), and the number of shares does not need to be an integer. (a) We write R₁, R2 og Rs for the return of the portfolio in the three scenarios. Is it possible to choose a portfolio with (R₁, R₂, R3) = (1.000.000,-2.000.000, 200.000)? If so, how many shares do we need to buy of each of the three companies? (b) Determine all triples (R₁,R₂,R3) of possible returns in the three scenarios. Are there any portfolios with R₁, R2, R3> 0 (positive return in any scenario)? If so, specify one such portfolio (the number of shares in each company, and the corresponding returns).
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Answer rating: 100% (QA)
a Yes We need to buy 1 000 000 shares of A 2 000 000 shares of B and 100 000 shares of C ... View the full answer
Related Book For
Introduction to Governmental and Not for Profit Accounting
ISBN: 978-0132776011
7th edition
Authors: Martin Ives, Terry K. Patton, Suesan R. Patton
Posted Date:
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