Portfolio A has an expected return of 15% and a Sharpe ratio of 0.42. Portfolio B has an expected return of 20% and a Sharpe ratio of 0.37. Portfolio C has an expected return of 25% and a Sharpe ratio of 0.31. Among A, B, and C, rational risk-averse investors prefer to include which one into her complete portfolio? O There is not enough information to choose among A, B, C. O Portfolio B O Portfolio C O Portfolio A

Portfolio A has an expected return of 15% and a Sharpe ratio of 0.42. Portfolio B has an expected return of 20% and a Sharpe ratio of 0.37. Portfolio C has an expected return of 25% and a Sharpe ratio of 0.31. Among A, B, and C, rational risk-averse investors prefer to include which one into her complete portfolio? O There is not enough information to choose among A, B, C. O Portfolio B O Portfolio C O Portfolio A

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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3) The optimal risky portfolio has a Sharpe ratio of 0.8. However, one of your clients does not want to hold any oil and gas stocks in his portfolio. How would the Sharpe ratio of his optimal risky portfolio change? Please explain your answer for full credit. Focus MacBook Pro A
You would like to invest in a portfolio to the right of the optimal risky portfolio, on the capital allocation line. What do you need to do to achieve this? Select one: O a. It is not possible to invest to the right of the optimal risky portfolio O b. Borrow and invest in the optimal risky portfolio O c. Lend money at the risk-free rate of return O d. Short sell the optimal risky portfolio
Which of the following is true regarding the smart investor? Multiple Choice A. They require a risk premium for the risk taken B. They trade in the mornings when the market is least volatile C. They avoid risky investments D. They like investments with betas < 1
Building a zero-investment portfolio will always involve a. only long positions b. only short positions c. an unknown mixture of short and long positions d. equal investments in a short and a long position
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20. A portfolio of assets has lower risk than holding one asset, but the same expected return and higher transaction costs. Which of the following statements is most correct? A. The portfolio is attractive to people who are risk-averse and risk-neutral, but not to risk seekers B. The portfolio is attractive to investors who are risk-neutral C. The portfolio is not attractive to investors who are risk-neutral D. The portfolio is attractive to investors who are risk seekers
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Questionn 1- Select the incorrect statement about the optimal portfolio weights in the SIM from the following: a. When short sales are not allowed, the investor will hold more assets in her portfolio than when short sales are allowed. b. When the single index is tradeable, securities with negative will be shorted. c. When the single index is tradeable, securities with higher (given everything else constant) are more desirable. d. The investor's portfolio with no short sales is less desirable than the portfolio with short sales.
Suppose our portfolio consists of two stocks A and B. What should be the correlation between them so that we have no risk in our portfolio?
In portfolio management, risk reduction is achieved by investing in a portfolio in which the securities Question 3 options:1) have a high covariance 2) have a high correlation coefficient 3) have a low coefficient of variation 4) have a lowcovariance 5) are perfectly positively correlated.
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For a risk-averse investor, which of the following portfolios would be preferred? Portfolio B, with a Sharpe Ratio of 3. Portfolio A, with a Sharpe Ratio of 4. Portfolio D, with a Sharpe Ratio of 1. Portfolio C, with a Sharpe Ratio of 2.

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