Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Question:
(a) You are given the following information on two risky assets A and B.
E(X) = 25% E(Y) = 30% Var (X) = 16% Var (Y) = 49%
The correlation matrix is ( 1 0.5) ( 1 )
Required:
(i) Find the expected return and standard deviation of returns of the minimum variance portfolio.
(ii) If the two assets X and Y are perfectly correlated, what is the expected return and standard deviation of returns for an equally weighted portfolio? State your assumptions.
(b) An individual has the following utility function u(w) = ln (w). Her initial wealth is Rs 15,000. She has the possibility of participating in the following gamble at a cost of Rs 500, with a 30% chance of winning Rs 6,000, a 50 % chance of winning Rs 1000 and a 20% chance of losing Rs2,000.
(i) If she accepts the gamble, what is her expected utility of wealth? (ii) What is her certainty equivalent wealth? (iii) What is her risk premium? (iv) What is the Savage-Friedman hypothesis about? (v) If she lost in the first round, what is her expected utility in the second round? (c) If car insurance was not compulsory by law, would economic agents still buy insurance? Explain.
Calculate the EAR of the following APR: a. APR at 10.8% compounded monthly. (2 marks) b. APR at 8.4% compounded quarterly. (2 marks) c. APR at 9.0% compounded semi-annually. (2 mar
Part II The cost of equity (discount rate) can also be determined by using the Capital Asset Pricing Model (CAPM). Calculating the cost of equity using the CAPM model is often mor
What is an agent? What are the responsibilities of an agent? Ans: An agent is someone who has the implied or actual authority to act on behalf of another. The owners whom the
YOU company has decided to acquire a piece of equipment and is consi or leasing the asset that you plan to use for 4 years. you have the following: Purchase price:$10million Deperc
Question: (a) (i) Dene net premium and state the equation for net premium. (ii) Arshad, aged exactly 50, buys a 15-year endowment assurance policy with a sum assured of $ 5
It is an indicator used by traders to judge a security's long-term trend by comparing bars which comprise its closing, opening, high and low prices during a specific period of ti
Mergers & Acquisitions now is playing crucial role in modern corporate finance world. For any prospects, there is only one reason for a firm making an offer to M&A another firm,
From a Corporate Finance and Governance perspective, the assignment is about answering three fundamental questions: 1. How much value does the organisation create/destroy today?
What are the advantages and disadvantages of the alternative dividend policies of the three companies? Discuss the circumstances under which each managing director might be correct
helloo are you there
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!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd