Efficient frontier, Create a reasonable, but hypothetical,

Efficient frontier

Reference no: EM1358950

A. Construct a reasonable, but hypothetical, 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.

b. Now 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? Finally, add a second set of indifference curves which leads to the selection of a different optimal portfolio. Why do the two investors choose different portfolios?

c. Now add the risk-free asset. What impact does this have on the efficient frontier?

Reference no: EM1358950

Questions Cloud

Explain what are some of the ethical challenges surrounding : Explain What are some of the ethical challenges surrounding the movie and music industries as they relate to the Internet

Major factor in living full healthy lives : Mental health is such a major factor in living full healthy lives. Give 3 mental health concerns that may help or hinder graceful transitions to old age, how do these problems evolve?

Find the magnitude of the acceration of each block : Find the magnitude of the acceration of each block. what is the magnitude of the average force exerted on the ball by the wall.

Illustrate what is the source of ikea success today : Illustrate what is the source of IKEA's success today. Can you see any weaknesses in the company. What might it do to correct these.

Efficient frontier : Create a reasonable, but hypothetical, graph that shows risk, as measured by portfolio standard deviation, on the X axis and expected rate of return on the Y axis.

Describe employee training and development : Describe Employee Training and Development and Create an argument for investing in training and development to improve employee performance

Discuss emotions, escalation and fairness : Describe the roles of emotion and fairness in decision making and apply critical thinking skills to analyze business situations.

Compute effects of an appreciation and a depreciation : Compute effects of an appreciation and a depreciation in the exchange rate on the price of its output in that country and the likely effects on the demand for its output.

Design er schema to keep track of information of votes : Design an er schema for keeping track of information about votes taken in the U.S. House of Representatives during the current two year congressional session.

User Account

All Pages