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Readme [11.4K]
3 years ago
15

Greta, an elderly investor, has a degree of risk aversion of a = 3 when applied to return on wealth over a one-year horizon. She

is pondering two portfolios, the s&p 500 and a hedge fund, as well as a number of one-year strategies. (all rates are annual and continuously compounded.) the s&p 500 risk premium is estimated at 5% per year, with a sd of 20%. The hedge fund risk premium is estimated at 10% with a sd of 35%. The returns on both of these portfolios in any particular year are uncorrelated with its own returns in other years. They are also uncorrelated with the returns of the other portfolio in other years. The hedge fund claims the correlation coefficient between the annual returns on the s&p 500 and the hedge fund in the same year is zero, but greta is not fully convinced by this claim. Compute the estimated annual risk premiums, sds, and sharpe ratios for the two portfolios
Business
1 answer:
Mars2501 [29]3 years ago
5 0

Answer:

<u>Risk premiums </u>= Alpha A x Risk Premium

S&P Portfolio Risk premiums = 3 x 5% = 15%

Hedge Fund Portfolio Risk premiums = 3 x 10% = 30%

<u>SDs</u> = Sd x √(A)

S&P Portfolio = 20% x √(3) = 34.64%

Hedge Fund Portfolio = 35% x √(3) = 60.62%

<u>Sharpe ratios </u>= Risk premium / SDs

S&P Portfolio = 15% / 34.64% = 0.43

Hedge Fund = 30% / 60.62% = 0.49

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Vlad [161]

Answer:

The answer is Fixed cost.

Fixed cost remains constant for a given period and does other change with the eh level of production. However, the per unit fixed cost decreases when the Level of production increases and vice versa.

Also, fixed cost is difficult to.control and manage relatively to the variable.costs.

Explanation:

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3 years ago
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  • Diseconomies of scale are the cost disadvantages that economic actors experience as a result of growing their organizational size or their output.
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<h3>What is Economies of scale ?</h3>
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7 0
2 years ago
McLin, Inc., is a calendar year S corporation. Its AAA balance is zero. Determine the tax aspects of the following transactions.
S_A_V [24]

Answer:

$10,000

Explanation:

Given that:

McLin holds $90,000 of AEP,  this implies what is salary is made of;

Tobias, the sole shareholder, has an adjusted basis of $80,000 in his stock.

Tobias is paid a $90,000 salary income.

Ignore the 20% QBID

We are to determine the  tax aspects of the  transactions

Since the company receives a  $90000 for salary expense. Thus Tobias basis is zero, then :

The tax aspect of the transaction  is : ($90000 - $80000)

The tax aspect of the transaction = $10,000

7 0
3 years ago
Which of the following production costs, if expressed on a per unit basis, would be most likely to change significantly as the p
Temka [501]

Answer:

The answer is Option D.

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8 0
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2042 will be the year the fund drys up, based on its current level.

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