You want to allocate your money between the risk free asset (0.016), a fixed income fund...
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You want to allocate your money between the risk free asset (0.016), a fixed income fund ( E(B)=0.082, Volatility(B)=0.14), and a diversified stock fund (E(S)-0.14, Volatility(S)=0.19). The correlation between the two risky funds is 0.28. When creating the optimal risky portfolio, how much weight in decimals should you invest in the diversified stock fund? You want to allocate your money between the risk free asset (0.016), a fixed income fund ( E(B)=0.082, Volatility(B)=0.14), and a diversified stock fund (E(S)-0.14, Volatility(S)=0.19). The correlation between the two risky funds is 0.28. When creating the optimal risky portfolio, how much weight in decimals should you invest in the diversified stock fund?
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Answer rating: 100% (QA)
o find the optimal weight to invest in the diversified stock fund we can use the Capital Market Line ... View the full answer
Related Book For
Corporate Finance
ISBN: 978-0077861759
10th edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe
Posted Date:
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