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Finance Two Questions




Question;Question 1) Define the following terms, using graphs or equations to illustrate your answers wherever feasible:a) Portfolio, feasible set, efficient portfolio, efficient frontierb) Indifference curve, optimal portfolioc) Capital Asset Pricing Model (CAPM), Capital Market Line (CML)d) Characteristic line, beta coefficient, be) Arbitrage Pricing Theory (APT)Question 2 Security A has an expected rate of return of 6%, a standard deviation of returns of 30%, a correlation coefficient with the market of -0.25, and a beta coefficient of -0.5. Security B has an expected return of 11%, a standard deviation of returns of 10%, a correlation with the market of 0.75, and a beta coefficient of 0.5. Which security is more risky? Why?


Paper#49415 | Written in 18-Jul-2015

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