5. It's found that due to inflation in US economy most investors are risk averse and...

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5. It's found that due to inflation in US economy most investors are risk averse and are seeking investment portfolio which will have a Beta close to market beta (i.e., Beta =1). In a 5-asset portfolio they have found 3 assets have beta over 1.5 with an average of 1.55. The overall market return is 12.3% dropped from 14.7%. The risk-free rate also dropped from 4.5% to 3.2%. Under such circumstances assets with what beta values should be included in a portfolio, so the return of portfolio will be minimum (beta of portfolio should be 1) but the portfolio beta will also be minimum? 5. It's found that due to inflation in US economy most investors are risk averse and are seeking investment portfolio which will have a Beta close to market beta (i.e., Beta =1). In a 5-asset portfolio they have found 3 assets have beta over 1.5 with an average of 1.55. The overall market return is 12.3% dropped from 14.7%. The risk-free rate also dropped from 4.5% to 3.2%. Under such circumstances assets with what beta values should be included in a portfolio, so the return of portfolio will be minimum (beta of portfolio should be 1) but the portfolio beta will also be minimum?

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In order to achieve a portfolio beta of 1 the portfolio should ... View the full answer