User Account

All Pages

Investor with mean-variance preference

Assignment Help Finance Basics
Reference no: EM133113632

Please use the following information for this question.

Assets

Beta

Expected return

X

0.8

0.16

Y

1.4

0.16

M

 

0.15

where "M" refers to the market portfolio, and all other assets not listed in the above table are fairly priced according to CAPM. The risk-free rate is 0.05. Which statement below about the optimal risky portfolio of an investor with mean-variance preference is true?

A. In addition to the market portfolio, it should long on asset X and short on asset Y

B. In addition to the market portfolio, it should short on asset X and long on asset Y

C. In addition to the market portfolio, it should long on both asset X and asset Y

D. In addition to the market portfolio, it should short on both asset X and asset Y

E. It should include the market portfolio only, as 0.16 and 0.16 are fair expected returns for assets X and Y respectively

Reference no: EM133113632

Questions Cloud

What is the real rate of return over period : Based on these assumptions, what is the real rate of return over this period
Calculate the price of the callable bond : GoGo Inc. plans to issue a perpetual callable bond that pays 11.4% annual coupons. The current interest rate is 8%. Two years later, there is 15% probability th
Find the average spending for all consumers : Active consumers make up 14.6% of the market and spend an average of $16.23 per month on your product. Passive consumers make up 24.8% of the market and spend a
What is bcci cost of equity capital : WACC. The common stock of Buildwell Conservation & Construction Inc. (BCCI) has a beta of .9. The Treasury bill rate is 4%, and the market risk premium is estim
Investor with mean-variance preference : Please use the following information for this question.
Explain temporarily overpriced-temporarily underpriced : What does it mean to say an asset is "temporarily overpriced" or "temporarily underpriced"? How can such a situation happen? Why is such overpricing or underpri
Identify the palliative population who will benefit from : identify the palliative population who will benefit from the innovation/improvement and explain the solutions offered by the chosen innovation/improvement
Find alternative capital structure : The company earned EBIT= $ 500.000 last year. This year the Company is planning payout dividend to its investors. 50% of shareholders are from Group of Manageme
Despite the moral hazard problem : Deposit Insurance has become a growing trend around the world despite the moral hazard problem it creates. Explain this problem, why the existence of this probl

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd