In 2019 you have invested for six months in four different securities (A, B, C, and...

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In 2019 you have invested for six months in four different securities (A, B, C, and D). During this whole year, the nominal risk-free rate of return was 10%, and the inflation rate was 9%. The annual tax rate for each investment is shown in the table below: Investment Tax Rate A B C D 20% 35% 9% 10% Based on the information above, please auswer the following questions: 1. Which is the best investment, and which is the worst investment? Please explain why. 2. What is the after-tax and after inflation real return of each investment on an annual basis? 3. What is the annual nominal risk premium of each investment? 4. Draw the SML for investments A and B and show the change in their slopes for the nominal values. 5. Which investment is likely to be capital appreciation, and which one is likely to be capital preservation during this holding period. Please explain why? 6. Based on the correlation table, which two investments provide the best diversification and which two provide the worse diversification? In 2019 you have invested for six months in four different securities (A, B, C, and D). During this whole year, the nominal risk-free rate of return was 10%, and the inflation rate was 9%. The annual tax rate for each investment is shown in the table below: Investment Tax Rate A B C D 20% 35% 9% 10% Based on the information above, please auswer the following questions: 1. Which is the best investment, and which is the worst investment? Please explain why. 2. What is the after-tax and after inflation real return of each investment on an annual basis? 3. What is the annual nominal risk premium of each investment? 4. Draw the SML for investments A and B and show the change in their slopes for the nominal values. 5. Which investment is likely to be capital appreciation, and which one is likely to be capital preservation during this holding period. Please explain why? 6. Based on the correlation table, which two investments provide the best diversification and which two provide the worse diversification?

Answer rating: 100% (QA)

To answer your questions lets analyze each investment based on the given information 1 The best investment would be the one with the highest aftertax ... View the full answer