How does the volume occupied by a cubic centimeter compare with the volume occupied by a millimeter
1 answer:
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Answer:
The portfolio should invest 48.94% in equity while 51.05% in the T-bills.
Explanation:
As the complete question is not given here ,the table of data is missing which is as attached herewith.
From the maximized equation of the utility function it is evident that
For the equity, here as
is percentage of the equity which is to be calculated
is the Risk premium whose value as seen from the attached data for the period 1926-2015 is 8.30%
is the risk aversion factor which is given as 4.
is the standard deviation of the portfolio which from the data for the period 1926-2015 is 20.59
By substituting values.
So the weight of equity is 48.94%.
Now the weight of T bills is given as
So the weight of T-bills is 51.05%.
The portfolio should invest 48.94% in equity while 51.05% in the T-bills.
