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Strike441 [17]
3 years ago
11

What are the correct steps?

Mathematics
1 answer:
Georgia [21]3 years ago
3 0
Add 1 to both sides and then split the parentheses to (x+3) and (x+3) then multiply them to get x^2+6x+9=36
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3 years ago
You manage a risky portfolio with an expected rate of return of 18% and a standard deviation of 28%. The T-bill rate is 8%. Your
Fofino [41]

Answer:

y = 0.80

Step-by-step explanation:

Given:

- The expected rate of return for risky portfolio E(r_p) = 0.18

- The T-bill rate is r_f = 0.08

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Investing proportion y of the total investment budget so that the overall portfolio will have an expected rate of return of 16%.

What is the proportion y?

Solution:

- The proportion y is a fraction of expected risky portfolio and the left-over for the T-bill compliance. Usually we see a major proportion is for risky portfolio as follows:

                                     E(r_c) = y*E(r_p) + (1 - y)*r_f

                                     y*E(r_p) + (1 - y)*r_f = 0.16

- Re-arrange for proportion y:

                                     y = ( 0.16 - r_f ) / (E(r_p) - r_f)

- Plug in values:

                                    y = ( 0.16 - 0.08 ) / (0.18 - 0.08)

                                    y = 0.80

- Hence, we see that 80% of the total investment budget becomes a part of risky portfolio returns.                                    

               

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