# Question

Using geometric mean, which investment is preferred in Problem 11?

In Problem 11

In Problem 11

## Answer to relevant Questions

Assume that you expect that the average return on a security in various markets is as shown in the following table. Assume further that the historical correlation coefficients shown in Table 12.1 are a reasonable estimate of ...What is the correlation of return between markets from the point of view of each investor? Assume that an asset exists with (R-bar)3 = 15% and β3 = 1.2. Further assume the security market line discussed in Problem 1. Design the arbitrage opportunity. Assume that returns are generated as follows: Where C is the rate of change in interest rates. Derive a general equilibrium relationship for security returns. Assume that the following two-index model describes returns: Assume that the following three portfolios are observed. Find the equation of the plane that must describe equilibrium returns.Post your question

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