a) Investing in stock market is like taking on a gamble. Please comment on the statement...
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a) "Investing in stock market is like taking on a gamble." Please comment on the statement and explain if we believe investors are risk-averse, why do they gamble? (12 marks) b) Based on the following information of the first risky portfolio (P) that you have created as a portfolio manager, answer the following questions. Portfolio expected return Portfolio standard deviation Treasury bill rate 45% 24% 2% 1) for a client with risk aversion (A) equal to 4, what is the utility levels of a complete portfolio (C) including 25% invested in treasury bill money market fund and 75% in your risky portfolio? (5 marks) 2) Calculate the sharp ratios for the risky portfolio P and the complete portfolio C. (8 marks) a) "Investing in stock market is like taking on a gamble." Please comment on the statement and explain if we believe investors are risk-averse, why do they gamble? (12 marks) b) Based on the following information of the first risky portfolio (P) that you have created as a portfolio manager, answer the following questions. Portfolio expected return Portfolio standard deviation Treasury bill rate 45% 24% 2% 1) for a client with risk aversion (A) equal to 4, what is the utility levels of a complete portfolio (C) including 25% invested in treasury bill money market fund and 75% in your risky portfolio? (5 marks) 2) Calculate the sharp ratios for the risky portfolio P and the complete portfolio C. (8 marks)
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Related Book For
Microeconomics An Intuitive Approach with Calculus
ISBN: 978-0538453257
1st edition
Authors: Thomas Nechyba
Posted Date:
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