Assume that an investment in the S&P 5 0 0 index gives an average return of 1
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Question:
Assume that an investment in the S&P index gives an average return of The shortterm US government bond provides a riskfree return of
a If you aim to earn an expected return of how would you construct a portfolio from these two assets?..
b If you aim to construct the asset portfolio with a beta of how much you would invest in the S&P index and in the riskfree bond?
c Calculate the riskfree premium in a and b and show that they are proportional to their betas.
Related Book For
Microeconomics An Intuitive Approach with Calculus
ISBN: 978-0538453257
1st edition
Authors: Thomas Nechyba
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