Question: Please write answer and explan 17) You have $500,000 available to invest. The risk-free rate, as well as your borrowing rate, is 8%. The return
Please write answer and explan

17) You have $500,000 available to invest. The risk-free rate, as well as your borrowing rate, is 8%. The return on the risky portfolio is 16%. If you wish to earn a 22% return, vou should A) invest $375,000 in the risk-free asset B) invest $125,000 in the risk-free asset C) borrow $125,000 D) borrow $375,000 18) You invest $1,000 in a complete portfolio. The complete portfolio is composed of a risky asset with an expected rate of return of 16% and a standard deviation of 20% and a Treasury bill with a rte of return of 6%. A portfolio that has an expected value in 1 year of $1,100 could be formed if you A) place 60% of your money in the risky portfolio and the rest in the risk-free asset B) place 75% of your money in the risky portfolio and the rest in the risk-free asset C) place 40% of your money in the risky portfolio and the rest in the risk-free asset D) place 55% of your money in the risky portfolio and the rest in the risk-free asset 19) You are considering investing $1,000 in a complete portfolio. The complete portfolio is composed of Treasury bills that pay 5% and a risky portfolio, P, constructed with two risky securities, X and Y. The optimal weights of X and Y in P are 60% and 40%, respectively. X has an expected rate of return of 14%, and Y has an expected rate of return of 10%. To form a complete portfolio with an expected rate of return of 11%, you should invest of your complete portfolio in Treasury bills. B)19% A) 25% C) 36% D) 50% 20) You are considering investing $1,000 in a complete portfolio. The complete portfolio is composed of Treasury bills that pay 5% and a risky portfolio, P, constructed with two risky securities, X and Y. The optimal weights of X and Y in P are 60% and 40% respectively. X has an expected rate of return of 14%, and Y has an expected rate of return of 10%. To form a complete portfolio with an expected rate of return of 8%, you should invest approximately also invest approximately security X and Y, respectively in the risky portfolio. This will mean you will of your complete portfolio in an A) 25%:45%; 30% C) 40%,24%; 16% B) 0%; 60%; 40% D) 50%; 3090; 2090 21) Asset A has an expected return of 15% and a reward-to-variability ratio of .4. Asset B has an expected return of 20% and a reward-to-variability ratio of .3. A risk-averse investor would prefer a portfolio using the risk-free asset and A) asset E B) no risky asset C) The answer cannot be determined from the data given. D) asset A
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
