3.1 Show that for any portfolio w =equal to(wi,..., wn) the Beta of the portfolio isBw = wiB1 ++ wn Bn,!!...where B; for i = 1,...,n are Betas of individual assets.

Beta is a determination of the risk of an asset with respect to market risk. Here, the market risk…

Answered: 3.1 Show that for any portfolio w = =…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Exercise Exercise 1. Consider the Cournot game G = (I, (Ai, Ti)i≤1) such that: 1. I = {1,2} is the set of firms. 2. AR+ is the set of firm i's strategies. 3. TAR is firm i's payoff function defined by, for some c ≥ 0, Ti(Qi, 9−i) = max{1 − (qi + q−i), 0}qi — cqi. Answer the following questions: 1. Find all (pure-strategy) Nash equilibria in the case of c = = 0. 2. Find all (pure-strategy) Nash equilibria in the case of c = (0, 1). 3. Find all (pure-strategy) Nash equilibria in the case of c = [1,∞). Exercise 2. Consider the Braess's paradox G 1. I = {1,2,. , 10} is the set of people. ... 2. A = {1,0} is person i's strategy space. = (I, (Ai, ui)i≤1) such that: 3. u AR is person i's payoff function defined by -11-Σjel aj if ai =1 ui (a) = -11-Σje(1a) if a = 0, where Σ;a; is the number of people choosing strategy 1 and Σ; (1 - a;) is the number of people choosing strategy 0. Show that every (pure-strategy) Nash equilibrium has five people choosing route SAG and five players choosing route…

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3.1 Show that for any portfolio w = = (wi,, wn) the Beta of the portfolio is equal to Bw=w₁31 +...+ Wnßn, where 3, for i = 1,...,n are Betas of individual assets.