Consider the following information about a risky portfolio that you manage and a risk-free asset: E(rp)...
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Consider the following information about a risky portfolio that you manage and a risk-free asset: E(rp) = 12%, op = 22%, rf = 4%. a. Your client wants to invest a proportion of her total investment budget in your risky fund to provide an expected rate of return on he overall or complete portfolio equal to 7%. What proportion should she invest in the risky portfolio, P, and what proportion in the risk- free asset? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Risky portfolio Risk-free asset % % b. What will be the standard deviation of the rate of return on her portfolio? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Standard deviation % c. Another client wants the highest return possible subject to the constraint that you limit his standard deviation to be no more than 12%. Which client is more risk averse? O First client O Second client Consider the following information about a risky portfolio that you manage and a risk-free asset: E(rp) = 12%, op = 22%, rf = 4%. a. Your client wants to invest a proportion of her total investment budget in your risky fund to provide an expected rate of return on he overall or complete portfolio equal to 7%. What proportion should she invest in the risky portfolio, P, and what proportion in the risk- free asset? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Risky portfolio Risk-free asset % % b. What will be the standard deviation of the rate of return on her portfolio? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Standard deviation % c. Another client wants the highest return possible subject to the constraint that you limit his standard deviation to be no more than 12%. Which client is more risk averse? O First client O Second client
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Question c Q Expected return on risky 120 Return on risky 4 weighted average return 7 Let weight on ... View the full answer
Related Book For
Organic Chemistry
ISBN: 978-1118133576
11th edition
Authors: Graham Solomons, Craig Fryhle, Scott Snyder
Posted Date:
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