Problem 1: Your client holds 125% of her wealth in an index fund that tracks the S&P
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Question:
Problem 1: Your client holds 125% of her wealth in an index fund that tracks the S&P 500, which has expected return & risk of 11% & 21% respectively. The risk-free rate = 3.2%. What is the client's risk aversion?
As stated in Problem #1 above, the client holds 125% of her wealth in the S&P 500 index fund. Explain how that can be accomplished. What is the client's allocation to T-Bills?
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