PS04-solution

Course: FinanceAs a great investor, you are interested in 3 assets to invest: A, B and C. A financial advisor tells you that the returns on the assets are independent of each other, and you are given the following data: Asset A B C E(Ri) 0.05 0.035 0.06 Variance 0.0015 0 0.008 You have not yet analyzed what your degree of risk aversion (A) is, but you know that your utility function behaves as follows: U[ E(Rp)] = E(Rp) - 0.5 * A * Variance. (See attached image for a better understanding) You are asked to:(a) Find the optimal portfolio with these 3 assets {called wA, wB and wC}.b) Calculate the expected return and risk of the optimal portfolio for the following degrees of risk aversion (A):(i) A = 5(ii) A = 10(iii) A = 16   Please ASAP

You are given the following data about Asset A and Asset B.                                                                           Asset A                 Asset B                               Expected returns                    8.6%                   7.9%                               Standard Deviation                3.8%                   4.6%                 Assuming that an investor is to choose between Asset A or Asset B, explain which asset               a rational investor will choose.     c) With the use of a diagram, explain why an investor will always choose a point on the              SML line.

Can somebody help me with the questions below? Please make sure your EXACT answers are clear in your response. Please answer the question mathematically. Thank you!

Hi there, I am trying to figure out how to calculate 5 data points so I can plot the feasible set of portfolios for A, B and C on a graph. I am unsure of the process to calculate the data points.   ρ23 is +1.0 Thank you

Pls do fast and i will rate instantly for sure..pls give correct answer.. Try to give solution in typed form

PLEASE ANSWER ALL THE QUESTIONS Question 1  Fill the parts in the above table that are shaded in yellow. You will notice that there are nine line items.  Question 2  Using the data generated in the previous question (Question 1);a) Plot the Security Market Line (SML)  b) Superimpose the CAPM’s required return on the SML  c) Indicate which investments will plot on, above and below the SML?  d) If an investment’s expected return (mean return) does not plot on the SML, what does it show? Identify undervalued/overvalued investments from the graph  Question 3  From the information generated in the previous two questions; a) Identify two investment alternatives that can be combined in a portfolio. Assume a 50-50 investment allocation in each investment alternative. b) Compute the expected return of the portfolio thus formed. c) Compute the portfolio’s beta. Is the portfolio aggressive or defensive?

Please answer all questions

Question 5. You can invest in two risky assets, rị and r, and one risk-free asset, rf . The two risky assets are uncorrelated, and values are E[r] = 8%, E[r2] = 6%, Var[r] = 10%,Var[r2] = 3%, and rf = 3% If you have a mean-variance optimizer with a risk aversion A = 2, what is the optimal portfolio?

(Click on the icon here into a spreadsheet.) T in order to copy the contents of the data table below Investment X Y Z Expected return 17% 17% 17% Standard deviation 7% 8% 9%

Please answer the question in image from textbook

6. Use Excel, Calculator, and Formula. Show your work. Based on the data below, estimate the following: E(r) = [Probability of Economic State x Return in Economic State 0² (r) = [[Return in State; - E(r)]³ x Probability of State; a. Estimate the expected return and risk of Asset A (TESLA) b. Estimate the Expected Return and risk of Asset B (APPLE) c. Estimate the Expected return and risk of a 60A and 40B portfolio d. Summarize your results and determine whether the Portfolio Diversification helped decrease the investment risk. Explain your answer. State of the Economy Probability of Economic State S Pr 1 N 0.6 Return In Economic State TESLA APPLE R R 0.27 -0.10 -0.15 0.35

On the basis of the utility formula below, which investment would you select if you were risk averse with A = 4?    Investment Expected return E(r) Standard deviation σ 1 0.12 0.30 2 0.15 0.50 3 0.21 0.16 4 0.24         0.21

Question 1 Fill the parts in the above table that are shaded in yellow. You will notice that there are nineline items.  Question 2Using the data generated in the previous question (Question 1);a) Plot the Security Market Line (SML) b) Superimpose the CAPM’s required return on the SML c) Indicate which investments will plot on, above and below the SML? d) If an investment’s expected return (mean return) does not plot on the SML, what doesit show? Identify undervalued/overvalued investments from the graph

Could you use formulas in order to get those answers, like the images I have attached to this follow-up questions?

Gg.50.

Help

1. If you perform a NPV analysis on a perspective investment using a "d" = 15% and:       a. the NPV Is < 0, what can you tell me about the investment's IRR (time adjusted rate of return)?       b. the NPV is > 0, what can you tell me about the investment's IRR (time adjusted rate of return)?        c. the NPV is= 0, what can you tell me about the investment's IRR (time adjusted rate of return)?          2. We presume in Investment analysis that the payback method of evaluation is a better measure of.................than it is a measure of...................... We also think less of the payback method because it sometimes ignores the............., ..................of an investment since the................. the oftentimes occurs after the payback period has lapsed.        3. Please explain why we oftentimes equate EBITDA (earnings before subtracting] interest, taxes, depreciation & amortization) with NOI (net operating income) in examining business' profitability. Why don't…

Question 1Fill the parts in the above table that are shaded in yellow. You will notice that there are nineline items. Question 2 Using the data generated in the previous question (Question 1)a) Plot the Security Market Line b) Superimpose the CAPM’s required return on the SML c) Indicate which investments will plot on, above and below the SML?d) If an investment’s expected return (mean return) does not plot on the SML, what doesit show? Identify undervalued/overvalued investments from the graph

Assume you are risk-averse and have the following three choices. Standard Deviation Project A B C Expected Value $ 2,520 2,930 2,480 $ 1,420 1,050 1,040 a. Compute the coefficient of variation for each. Note: Round your answers to 3 decimal places. Project A B C Coefficient of Variation b. Which project will you select? O Project C O Project A O Project B

Can you have an investment with DCFRR > MARR, but NPV $0 (calculating NPV with iTyM=MARR)? Can you have an investment with DCFRR < MARR, and NPV < $0 (calculating NPV with iTyM=MARR)?

Example 3 Inns oont alafrA Following Example 2, consider a porfolio with three assets S1, S2 and S3 which have expected rates of return 0.1,0.15 and 0.2 respectively, and variance-covariance matrix odni tanoma bszt a aitevi ot botoly 0.1 0.1 -0.1 0.1 0.2 0.1 ololles V = -0.1 0.1 0.6 vo ) isaas sod slais a at gaiteoo ottg ndi oda vodT (aldanoitesup als ot-lais wod ibuadala abnod on a) What is the optimal portfolio when up = worod of sidad = 0.2. adt yhalinie ini ba moe ja SOLUTION lo ano ot b) Use this piece of information and the earlier optimal portfolios from la aao e. Example 2 to find the quadratic equation relating of and up. ni bstni sd SOLUTION tar oad o bo s e) Hence draw a plot of the solutions, and identify the frontier port- Ldon to slar folios. it SOLUTION ods Btvni gatela dt

Can you please answer and kindly show detailed human working.

i need the answer quickly

- Exercise 2 An investor who maximizes a linear mean-variance utility, U(µp, σp) μpaσ, optimally invests half of her wealth in asset 1, having expected re- turn μ₁ = 10% and standard deviation σ1 10%, and half of her wealth in a risk-free asset, having return FR = 4%. = (a) Find the efficient frontier and represent it in the plane (σp, μP) (assuming that the investor feasible portfolios can include a short position in the risk- free asset). (b) Find the risk-aversion parameter a of the investor. (c) Using the same efficient frontier, for which levels of risk-aversion parameter the investor has a negative position in the risk-free asset? =

Can someone give an example or scenario of the following: 1. Mean-Variance Analysis 2. Global minimum-variance portfolio 3. Capital allocation line (CAL) 4. Tangency Portfolio Then someone answered this, Im looking for the continuation. Thankyou :) “Since you have posted a question with multiple sub-parts, we will solve first three sub parts for you. To get remaining sub-part solved please repost the complete question and mention the sub-parts to be solved.” The process of evaluating a level of risk denoted as a variance, which an individual will encounter for a certain expected return is known as mean-variance analysis. Investors are concerned about mean-variance analysis for better decision making regarding investments.Explanation:Mean variance analysis: Mean variance method is used in the scenarios where stock deviates from mean position and variance can be computed over a standard deviation. Stocks in the particular portfolio can be correlated under mean variance analysis.Global…