Question: Please show workings so I can understand how you got the answer please! Thank you 5. The risk free rate is 4%. The optimal risky

Please show workings so I can understand how you got the answer please! Thank you

Please show workings so I can understand how you got the answer

5. The risk free rate is 4%. The optimal risky portfolio has an expected return of 10% and standard deviation of 20%. Answer the following questions. Total: 20 marks. (a) Assume the utility function of an investor is U=E(r)0.5A2. What is condition of A to make the investors prefer the optimal risky portfolio than the risk free asset? marks) (b) Assume the utility function of an investor is U=E(r)22. What is the expected return and standard deviation of the investor's optimal complete portfolio? (10 marks)

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Design the interface circuit in Figure P3=71 so that $R$ OUT $=50 \Omega$ and the voltage delivered to the $50-\Omega$ load is $v=$ 2.5V. 15 V + 100 (2 Ww RIN Interface. circuit ROUT 50 22

Please show workings so I can understand how you got the answer - thank you ! 4. You are an alpaca farmer and would like to hedge the risk you face due to alpaca wool price fluctuations....

i am having doubts in the entire paper. please help me with this homework Homework #2 Oomplete all five problems below. The homework will be graded mostly based on completeness (refer to the syllabus...

please help me solve the following 5!! please only attempt if you can solve all 5! thank you so much for your time, will rate! Glaze Stock had returns of 6%, -12%, 18%, and -4% over the past four...

USE FORMULAS WHERE REQUIRED AND SHOW ALL WORKINGS. REPLY IN MAX 30MINS ANSWER ALL QUESTIONS (xi) A stock has a beta value of 1.4. The risk free rate is 4.5% while an expected return on a market...

Please help me with this accounting question. I'm stuck. Thank you :) (Please show work so I can understand how you got the answer, thank you) Dwight Donovan, the president of Perez Enterprises, is...

Please show work so I can understand how you came to that answer, thank you Chapter 5-6: Risk and Return and Asset Allocation 1.Rates of Return 1) Arithmetic average return: In-(ri+r2+r3...+ rn) 2)...

Please see the attached file. Here are 9 questions and 8 answers. You have to make paraphrase for all 8 answers. Because 8 answers are written by my class mate. Please wire down Q8 answers. I need...

Answer Only from question 8-12, thank you. A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the...

Please post answers back in an excel file, Thank you. Question 1 Consider two hypothetical stocks, X and Y. The expected return on stock X is equal to 9% and the expected return on stock Y is equal...

I need the answer for those questions: Complete all five problems below. The homework will be graded mostly based on completeness (refer to the syllabus for details). You may work with other...

Write about the cultural barriers in communication. (b) (i) Change the sentence from active to passive voice. By this time tomorrow we will have signed the deal. (ii) Change the sentence from passive...

Riveria Co. makes and sells a single product. The current selling price is $32 per unit. Variable expenses are $20 per unit, and fixed expenses total $43,200 per month. Sales volume for May totaled...

Which one of the following statements is incorrect regarding regular payback and discounted payback method? Question 8 options: Both regular payback and discounted payback method ignore cash flows...

Which of the following are problems with identifying users of ABC? Multiple select question. ABC means different things to different organizations. Organizations will announce the discontinuance of...

What do you think of the MBO program developed by Drucker?

What is long-term care insurance? Do you think this is a useful tool? Would you buy it?

Select one of the allied health profession jobs and explain your choice.