GEN COMBO LOOSELEAF INVESTMENTS; CONNECT ACCESS CARD
11th Edition
ISBN: 9781260201550
Author: Bodie
Publisher: MCG
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Chapter 6, Problem 11PS
Summary Introduction
Introduction: Portfolio consists of assets which have different rates as well as different risk associated with the assets, a risk free asset and asset that contains risk, both have a certain percentage of return.
To calculate: the utility levels of each portfolio for an investor with A=2.
Utility of portfolio can be calculated by the formula provided below:
Calculating utility for each investment taking A=2
| Return of portfolio (Return Weight of bills | Standard deviation of portfolio (Standard deviation weight of bills) | Variance of Portfolio | Weight of bills | Weight of Index | U(A=2) |
| 0.130 | 0.20 | 0.0400 | 0.0 | 1.0 | |
| 0.114 | 0.16 | 0.0256 | 0.2 | 0.8 | |
| 0.098 | 0.12 | 0.0144 | 0.4 | 0.6 | |
| 0.082 | 0.08 | 0.0064 | 0.6 | 0.4 | |
| 0.066 | 0.04 | 0.0016 | 0.8 | 0.2 | |
| 0.050 | 0.00 | 0.0000 | 1.0 | 0.0 |
Expert Solution & Answer
Explanation of Solution
Utility of portfolio can be calculated by the formula provided below:
Calculating utility for each investment taking A=2
| Return of portfolio (Return Weight of bills | Standard deviation of portfolio (Standard deviation weight of bills) | Variance of Portfolio | Weight of bills | Weight of Index | U(A=2) |
| 0.130 | 0.20 | 0.0400 | 0.0 | 1.0 | |
| 0.114 | 0.16 | 0.0256 | 0.2 | 0.8 | |
| 0.098 | 0.12 | 0.0144 | 0.4 | 0.6 | |
| 0.082 | 0.08 | 0.0064 | 0.6 | 0.4 | |
| 0.066 | 0.04 | 0.0016 | 0.8 | 0.2 | |
| 0.050 | 0.00 | 0.0000 | 1.0 | 0.0 |
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Students have asked these similar questions
Portfolio betas Personal Finance Problem Rose Berry is attempting to evaluate two possible portfolios, which
consist of the same five assets held in different proportions. She is particularly interested in using beta to compare
the risks of the portfolios, so she has gathered the data shown in the following table:
a. Calculate the betas for portfolios A and B.
b. Compare the risks of these portfolios to the market as well as to each other. Which portfolio is more risky?
a. The beta for portfolio A is
(Round to four decimal places.)
The beta for portfolio B is
(Round to four decimal places.)
b. Which portfolio is more risky? (Select the best answer below.)
A. Portfolio B
B. Portfolio A
○ C. They are the same.
No aiPlease don't answer i posted blurred image mistakely.
please comment below i will write values.
if you answer with incorrect values i will give unhelpful confirm.
finance subjPlease don't answer i posted blurred image mistakely.
please comment below i will write values.
if you answer with incorrect values i will give unhelpful confirm.
Chapter 6 Solutions
GEN COMBO LOOSELEAF INVESTMENTS; CONNECT ACCESS CARD
Ch. 6.A - Prob. 1PCh. 6.A - Prob. 2PCh. 6 - Prob. 1PSCh. 6 - Prob. 2PSCh. 6 - Prob. 3PSCh. 6 - Prob. 4PSCh. 6 - Prob. 5PSCh. 6 - Prob. 6PSCh. 6 - Prob. 7PSCh. 6 - Prob. 8PS
Ch. 6 - Prob. 9PSCh. 6 - Prob. 10PSCh. 6 - Prob. 11PSCh. 6 - Prob. 12PSCh. 6 - Prob. 13PSCh. 6 - Prob. 14PSCh. 6 - Prob. 15PSCh. 6 - Prob. 16PSCh. 6 - Prob. 17PSCh. 6 - Prob. 18PSCh. 6 - Prob. 19PSCh. 6 - Prob. 20PSCh. 6 - Prob. 21PSCh. 6 - Prob. 22PSCh. 6 - Prob. 23PSCh. 6 - Prob. 24PSCh. 6 - Prob. 25PSCh. 6 - Prob. 26PSCh. 6 - Prob. 27PSCh. 6 - Prob. 28PSCh. 6 - Prob. 29PSCh. 6 - Prob. 1CPCh. 6 - Prob. 2CPCh. 6 - Prob. 3CPCh. 6 - Prob. 4CPCh. 6 - Prob. 5CPCh. 6 - Prob. 6CPCh. 6 - Prob. 7CPCh. 6 - Prob. 8CPCh. 6 - Prob. 9CP
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