Question: please help Q2. Consider the information in the table below on 16/03/2018. Assume these stocks are the components of the stock market indexes (e.g. PWI,
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Q2. Consider the information in the table below on 16/03/2018. Assume these stocks are the components of the stock market indexes (e.g. PWI, EWI or VWI). Stock Price Market Cap (mill) Pepsi Co 111.64 158,768.04 Alphabet 1134.42 338616.43 Lilly & Co 80.49 88,184.68 Exon Mobile 75.12 318318.15 Calculate the value of a PWI, assuming an index divisor of 3.5940256. A. 1050 B. 390 C. 3.59 D. 370 E. Cannot be determined Q3. Darcy is a mean variance optimizer with a risk aversion coefficient of 3. For the coming year, he has the choice of investing his nest egg of $2000 in one of two risky mutual funds, A and B. A has an expected return of 9% and a standard deviation of 20%, whereas B has an expected return of 10% and a standard deviation of 25%. In addition to being able to invest in one of funds A and B, he can also invest in a short-term money market fund that invests in U.S. Treasury bills, which yield 6% currently. The money market fund also allows good clients like Darcy to short sell the money market fund with minimal transactions costs. The following additional information is available on the two funds. Which mutual fund should Darcy choose? A. Mutual fund A B. Mutual fund B C. A and B are equally preferred D. None of the above
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