User Account

All Pages

Plot the efficient frontier

Assignment Help Business Economics
Reference no: EM133077568

In the modern theory of investment, the investor may use the efficient frontier how to optimize their optimal portfolio. The Capital Allocation Line (CAL) is a line created on a graph of all possible combination between risk-free rate asset and risky assets. The efficient frontier to show the best possible return and the risk that can are attainable. Assume the risk-free rate is 3%. Azlan is a risk-averse investor and he attracted to the modern theory and he try to apply with the real practice.

Use the following data to answer the questions:

Portfolio

Return (rp)

Risk (σp)

A

B

C

D

E

F

G

IC1

IC2

IC3

 

20%

14

18

11

14

4

10

22

23

18

14%

9

9

4

5

8

10

4

8

18

Required:

  1. Plot the efficient frontier from the above data in the table on the graph paper. Analyse your findings from the graph.
  2. Plot the indifference curves (IC1, IC2 and IC3) from the risk-free point and the data as in the table above. Analyse your IC1, IC2 and IC3 to formulate the best optimal portfolio.
  3. By using the Capital Market Line (CML), explain to Azlan how it can benefit him and may attract him to invest in the capital market. Support with the CML on the same graph paper.

Reference no: EM133077568

Questions Cloud

Analyze the pressures on profits : Use Porter's Five Forces to analyze the pressures on profits for your chosen group's firms.
Sum of final consumption expenditure : The report does not provide information on GDP by industry. One of the reasons is that GDP by industry and GDP expenditure-based are not directly comparable
Purchasing and technology : Discuss how you think this technology will change food and beverage purchasing. A large part of purchasing has to do with contracts.
Control system to automatically raise and lower lift-bridge : Devise a control system to automatically raise and lower a lift-bridge to permit ships to pass. No continuous human operator is permissible.
Plot the efficient frontier : Plot the efficient frontier from the above data in the table on the graph paper. Analyse your findings from the graph.
Purchasing process and method : As you learned in your reading, procurement or purchasing is the precursor to the rest of the food service management system.
Calculate total expenditure for consumers at equilibrium : (a). Calculate the total WTP/value/benefit for consumers at the equilibrium. Interpret your calculation.
Future effect of health policies on healthcare system : Evaluate the current and future effect of health policies on the healthcare system. Are there trends occurring that will have an effect?
Roles of united nation through the years : 1. Explaining the many roles of United Nation through the years.

Reviews

Write a Review

Business Economics Questions & Answers

  Local bank in merrina

After retirement, Molly deposits $500,000 in a local bank in Merrina. At an interest rate of 4 percent, she will receive approximately _____ after 3 years.

  Intersection at the same time

Two cars A and B leave an intersection at the same time. Car A travels west at an average speed of x miles per hour and car B travels south at an average speed

  Describe one situation from own life

You have a free ticket to see ABBA in concert, which you cannot re-sell. Justin Bieber is performing on the same night

  What is consumer and producer surplus in this market

A monopolist has total cost TC = 200 + .5 Q2. Marginal cost is Q and the market demand is Q = 100 - P/2. Draw a graph showing ATC, MgC, Demand, Mg Revenue and the optimal choice of the monopolist. What is consumer and producer surplus in this market?..

  Crude oil price fluctuations

Use graphs, formulae and diagrams where they help your explanations (more rigorous and succinct) compared to words alone.

  Husband of barron stated response to a cut in allowance

Barron, to his parents dislike, has been smoking cigarettes. Trying to dissuade his son from smoking, father Donald Trump asked Barron if he would smoke less

  What happens to demand for labor

Illustrate what is her economic profit or economic loss.  What happens to demand for labor. What are the new equilibrium wage rate and employment level.

  Two firms are planning their market strategies firm k can

two firms are planning their market strategies. firm k can earn 25 million in profits from strategy s if firm l

  Computers must be the capital-intensive sector

In the Heckscher-Ohlin model, if the share of country’s capital used in Computers is higher than the share of country’s labor used in Computers, then Computers must be the capital-intensive sector. Consider a specific factor model with labor as a mob..

  A synopsis of trade barriers or other restrictions

An assessment of the infrastructure of China for the proposal of UBER car service. A synopsis of trade barriers or other restrictions that might be encountered in China. Recommend a distribution channel and intermediaries that could be appropriate fo..

  Compute the inventory at april 30 on each of the following

Compute the inventory at April 30 on each of the following bases. Assume that perpetual inventory records are kept in units only. Carry unit costs to the nearest cent.

  Bias the calculation of the consumer price index

Explain how the introduction of new goods might bias the calculation of the consumer price index. Why is there a lag between the Fed’s actions and the economy’s response? Why is there a lag between the Fed’s actions and the economy’s response?

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