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Rashid [163]
4 years ago
15

Treasury bills are paying a 4% rate of return. A risk-averse investor with a risk aversion of A = 3 should invest entirely in a

risky portfolio with a standard deviation of 24% only if the risky portfolio's expected return is at least ______.
Business
2 answers:
Tomtit [17]4 years ago
7 0

Answer:

Answer is 12.64%. Therefore,

Treasury bills are paying a 4% rate of return. A risk-averse investor with a risk aversion of A = 3 should invest entirely in a risky portfolio with a standard deviation of 24% only if the risky portfolio's expected return is at least 12.64%.

Refer below for the explanation.

Explanation:

E - 4%= 0.5(3)(24%)2

E=12.64%

AVprozaik [17]4 years ago
5 0

Answer:

21.28%

Explanation:

This can be calculated using the risk aversion formula as follows:

A = (R – r) ÷ SD^2 ……………………………… (1)

Where;

A = risk aversion rate = 3

R = Portfolio’s expected return = ?

r = Treasury bills rate of return = 4%, or 0.04

SD^2 = Square of portfolio’s standard deviation = (24%)^2, or 0.24^2 = 0.0576

Substituting the values into equation (1) and solve for R, we have:

3 = (R – 0.04) ÷ 0.056

R – 0.04 = 3 × 0.056

R = 0.1728 + 0.04 = 0.2128, or 21.28%.

Therefore, the risky portfolio's expected return is at least 21.28%.

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Answer:

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Explanation:

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wolverine [178]

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Explanation:

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Answer:

Please refer to the below;

Explanation:

Difference between Floor inspection and Functional inspection.

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• Functional inspection is an inspection that checks the overall function of a product rather than what makes up the component parts. For instance the load capacity and speed of a vehicle can be checked for optimal performance whereas individual parts that make up the vehicle are not checked, yet bring out satisfactory performance when combined together. This form of inspection is concerned with verification of final output and does not provide details about different sections instead provides a wider understanding of comfort that emanate from inspecting same item.

Points of Convergence between Floor inspection and Functional inspection.

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• Both floor and functional inspection work to prevent defective product from flowing down the successive operations and avoid loss to the company

• Both floor and functional inspection aim at meeting customers requirements, wants and needs.

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