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A. suppose Asset A has an expected return of 10%...

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A. suppose Asset A has an expected return of 10% and a standard deviation of 20%. Asset B has an expected return of 16% and a standard deviation of 40%. I f the correlation between A and B is 0.35, what are the expected return and standard deviation for a portfolio consisting of 30% Asset A and 70% Asset B? B. Plot the attainable portfolios for a correlation of 0.35. Now plot the attainable portfolios for correlations +1.0 and -1.0. C. Suppose a risk-free asset has an expected return of 5%. By definition, its standard deviation is zero, and its correlation with any other asset is also zero. Using only Asset A and the risk-free asset, plot the attainable portfolios. D. Construct a plausible graph that shows risk (as measured by portfolio standard deviation) on the x-axis and expected rate of return on the y-axis. Now add an illustrative feasible (or attainable) set of portfolios and show what portion of the feasible set is efficient. What makes a particular portfolio efficient? Don?t worry about specific values when constructing the graph ? merely illustrate how things look with ?reasonable? data. E. Add a set of indifference curves to the graph created for part b. What do these curves represent? What is the optimal portfolio for this investor? Add a second set of indifference curves that leads to the selection of a different optimal portfolio. why do the two investors choose different portfolios?,Hi, I am unable to view the answers for A - C. VR Jo ANn

 

Paper#6898 | Written in 18-Jul-2015

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