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3 years ago

A portfolio with a beta of 1.26

Business

1 answer:

Vanyuwa [196]3 years ago

7 0

Answer:

The answer is C: is considerably more risky than the overall market.

Explanation:

The beta of a portfolio is the weighted sum of the individual asset betas, According to the proportions of the investments in the portfolio. A beta of “1” indicates that its volatility is like the benchmarks. A number higher than “1” indicates more volatility, while lower numbers indicate more price stability. Diversification can help make your portfolios less volatile, allowing you to see steady growth without seeing wild swings in the value of your savings.

A zero-beta portfolio is a portfolio constructed to have zero systematic risk or, in other words, a beta of zero. A zero-beta portfolio would have the same expected return as the risk-free rate.

Investors can determine the volatility of their whole portfolios by examining the beta of each holding. The calculation is simply a matter of adding up the beta for each stock and adjusting according to how much of each you own (weighted average).

In this case, the answer is: is considerably more risky than the overall market. A beta of 1,26 is 126% more risky than a free risk option, and 26% more risky than the overall market. It depends on the investor's resilience to risk whether the difference with the overall market is considerable or not.

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3 years ago

Read 2 more answers

Charlie's brother, Alexander, also consumes apples (A) and bananas (B). Alexander's utility function happens to be U(A, B) = 5A

Andrei [34K]

Solution :

$U(A, B) = 5A + 2B$

a). Bundles $(40, 5)$ = U ( _____ , 2), lie on the same indifference curve. Suppose missing numbers is x.

So, $U(40, 5) = U(x, 2)$

(40 x 5) + (2 x 5) = 50x + (2 x 2)

210 - 4 = 5x

$x = 41.2$

So Alexander has $40$ apples and $5$ bananas. The indifference curve though $(40, 5)$ also include bundle.

Therefore, (41.2, 2)

b). $MRS_{BA} = \frac{MU_B}{MU_A}$

$=\frac{\delta U/\delta B}{\delta U/\delta A}$

$=\frac{2}{5}$

= 0.4

So Alexander has $40$ apples and $5$ bananas with this bundle. Alexander would like to give up $0.4$ unit apples for a banana.

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3 years ago

For a normal good, if the price of a substitute good decreases then:

geniusboy [140]

Answer:

(B) the demand curve shifts leftward while the supply curve stays the same.

Explanation:

"Substitutes are goods where you can consume one in place of the other. The prices of complementary or substitute goods also shift the demand curve. When the price of a good that complements a good decreases, then the quantity demanded of one increases and the demand for the other increases. When the price of a substitute good decreases, the quantity demanded for that good increases, but the demand for the good that it is being substituted for decreases. "

Reference: Khan Academy. “Price of Related Products and Demand.” Khan Academy, Khan Academy, 2019

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3 years ago

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sp2606 [1]

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