# Question

What must be true about the sign of the risk aversion coefficient, A, for a risk lover? Draw the indifference curve for a utility level of .05 for a risk lover.

Consider the historical data of Table 5.7, showing that the average annual rate of return on the S& P/ TSX Composite portfolio over the past 56 years has averaged about 4.24 percent more than the Treasury bill return and that the Composite standard deviation has been about 17.42 percent per year. Assume that these values are representative of investors’ expectations for future performance and that the current T-bill rate is 5 percent. Use these values to answer problems 7 to 9.

Consider the historical data of Table 5.7, showing that the average annual rate of return on the S& P/ TSX Composite portfolio over the past 56 years has averaged about 4.24 percent more than the Treasury bill return and that the Composite standard deviation has been about 17.42 percent per year. Assume that these values are representative of investors’ expectations for future performance and that the current T-bill rate is 5 percent. Use these values to answer problems 7 to 9.

## Answer to relevant Questions

The expected return on T-bills is 5 percent and the same on the Composite index is 9.24 percent. Calculate the expected return and standard deviation of portfolios invested in T bills and the Composite index with weights as ...The correlation coefficients between pairs of stocks is as follows: Corr (A, B) = .85; Corr (A, C) = .60; Corr (A, D) =.45 Each stock has an expected return of 8 percent and a standard deviation of 20 percent. If you’re ...Which of the following statements about the minimum variance portfolio of all risky securities are valid? (Assume short sales are allowed.) Explain. a. Its variance must be lower than those of all other securities or ...I am buying a firm with an expected cash flow of $ 1,000 but am unsure of its risk. If I think the beta of the firm is 0.5, when in fact the beta is really 1, how much more will I offer for the firm than it is truly worth? ...Are the intercepts of the two regressions consistent with the CAPM? Interpret their values. Suppose that the index model for stocks A and B is estimated with the following results: RA = .03 + .70RM + eA RB = 2.02 + 1.20RM + ...Post your question

0