The next three questions are based on the following problem. Consider the market with no T-bils and two risky secuntes A and B such that E(A) =8.00% A30 00%, E(m)=15 00%, o40 00% with the correlation coetfioent equal to +1.28of 30Find the weights w. and we of the two securities in the optimal portfolio P for George whose coefficient of risk aversion is equal to 3Oa w125, W-0 25Ob w 1667, W-0 667Oc W-0 75, w-0 25Od W-05, W-05Oo W-0 667, w 1.667Unsure29 of 30What is the expected retum of the minimum variance portfollo in the market?Oa 13 0%Ob 61%Oc 53%Od 92%O 3.0%Unsute

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29 of 30 0 Unsure What is the expected return of the minimum variance portfolio in the market? Oa 130 % Ob 6.1% Oc -53% Od 92 % O 30%

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter6: Risk And Return

Section: Chapter Questions

Problem 14P

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Portfolio Management

Portfolio management is the process by which an investor decides that how the person will invest in a variety of assets in order to get a desired return in the future. A portfolio means a pool of assets that includes securities, bonds, and other investment instruments which helps in risk minimization of the money that has been invested. In other words, it can be said that a portfolio means a combination of assets in which an investor decides to invest their money in order to get a lump sum return in the future or even a series of cash flow that the person is expecting at the end of their job life.

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