Answer:
=> fraction of the portfolio that should be allocated to T-bills = 0.4482 = 44.82%.
=> fraction to equity = 0.5518 = 55.18%.
Explanation:
So, in this question or problem we are given the following parameters or data or information which are; that the utility function is U = E(r) – 0.5 × Aσ2 and the risk-aversion coefficient is A = 4.4.
The fraction of the portfolio that should be allocated to T-bills and its equivalent fraction to equity can be calculated by using the formula below;
The first step is to determine or Calculate the value of fraction to equity.
Hence, the fraction to equity = risk premium/(market standard deviation)^2 - risk aversion.
= 8.10% ÷ [(20.48%)^2 × 3.5 = 0.5518.
Therefore, the value for fraction of the portfolio that should be allocated to T-bills = 1 - fraction to equity = 1 - 0.5518 =0.4482 .
Marginal cost of capital (MCC) schedule is a graph that relates the firm's weighted average cost of each unit of capital to the total amount of new capital raised.
This is <u>not true</u> with regards to investing in stock: <u>A. A stockholder</u> will always receive a profit when the stock is sold.
<h3>Who is a stockholder?</h3>
A stockholder is a <u>part-owner</u> of a company who holds a stock.
The stockholder or shareholder may be a person, an institution, or another company.
Thus, it is <u>not true</u> that <u>A. A stockholder</u> will always receive a profit when the stock is sold.
Learn more about investing in stock at brainly.com/question/25300925
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Answer:
purchase A/c. Dr. Rs.11,000
To ABC CO.A/c. Rs.11,000
(being goods purchased in cash)
