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valkas [14]
2 years ago
14

A moderately​ risk-averse investor has 50 percent of her portfolio invested in stocks and 50 percent in​ risk-free Treasury bill

s. Show how each of the following events will affect the​ investor's budget line and the proportion of stocks in her​ portfolio: The standard deviation of the return on the stock market​ increases, but the expected return on the stock market remains the same. The budget line will ▼ and the slope will ▼
Business
1 answer:
Cloud [144]2 years ago
6 0

Answer:

increases and decreases

Explanation:

The budget line will become flat and the slope will decrease. The proportion of stocks in the portfolio will fall.

The equation for the budget line is given by,

Rp=((Rm-Rf)/SDm)*SDp + Rj

where Rp is the expected return on the portfolio, Rm is the expected return from investing in the stock market, Rf is the risk-free return on Treasury bills, SDm is the standard deviation of the return from investing in the stock market, and SDp is the standard deviation of the return on the portfolio.

So when the standard deviation of the return on the stock market increases, the slope of the budget line decreases making the budget line to become flatter. The budget line’s intercept stays the same as Rf does not change. As stocks have become riskier without a compensating increase in expected return, the proportion of stocks in the investor’s portfolio will fall.

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Answer:

a. Task-oriented

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3 years ago
What was the growth rate of per capita income in india on the eve of independence.
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The growth rate in India on the eve of independence was 0.5% per annum.

<h3>What is independence?</h3>

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On the eve of independence, the economy was sluggish, and agriculture was the main activity that sparked growth. The colonial authorities made no serious attempt to assess India's national and per capita GDP.

Therefore, it can be concluded that 0.5% p.a. was the growth of the India at the time of independence.

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4 0
2 years ago
Nysa works in an electricity distribution company’s customer service department. One day she gets a call from a customer who is
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Explanation:

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8 0
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Answer:

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Explanation:

Prepare a Purchases Budget to find the Purchases for February.

<u>Purchases Budget for February</u>

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Add Budgeted Closing Inventory ($45,000 × 30%)         $13,500

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Less Budgeted Opening Inventory                                 ($12,000)

Budgeted Purchases                                                         $46,500

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