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Readme [11.4K]
2 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]2 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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Chuck Stout is the RM for the Holiday Inn Express. His 220-room property normally sells 85 percent of its rooms on Tuesday night
Dmitriy789 [7]

Answer:

winning the group romm contract: $14,967.50

normal tuesday revenue                    $16,175.50

Explanation:

group contract:

125 rooms x $ 109       =  13,625

normal rooms:

(220-125)   x $ 141.50  = <u>  13,442.5  </u>

       total revenue:          27,067.5

variable cost: 220x55=  (12,100)

   contribution:                14,967.5

If it doesn't win the contract

will sale 220 x 85% = 187 rooms at 141.5 each

187 rooms x (141.5 - 55) = 16.175,5‬

3 0
3 years ago
Trudy owed Sam $40 for a book she purchased from him. Trudy mowed Betty's yard for $40 and agreed with Betty that Betty would pa
Sveta_85 [38]

Answer:

C. Sam will win because Trudy cannot avoid her obligations through a delegation.

Explanation:

If Sam sues Trudy for the $40 she owes him for the book then, Sam will win because Trudy cannot avoid her obligations through a delegation.

4 0
2 years ago
The comparative financial statements for Prince Company are below:
zheka24 [161]

Answer:

It is increases by 0.155 times

Explanation:

As we know that    

Current ratio = Current assets ÷ Current liabilities

where,

Current assets = Cash + account receivable + inventory

So in year 1, the current ratio is

= ($7,000 + $18,000 + $34,000) ÷ ($17,000)

= ($55,000) ÷ ($17,000)

= 3.47 times

And, in year 2 , the current ratio is

= ($4,000 + $14,000 + $40,000) ÷ ($16,000)

= ($58,000) ÷ ($16,000)

= 3.625 times

Therefore, it is increases by 0.155 times

8 0
3 years ago
The flexible response policy increased the military budget. how do you think this affected the nuclear arms race?
mrs_skeptik [129]
First if all remember that the flexible policy was created as an strategy to calls for a reaction <span>that can be easily modified to respond to war circumstances. This means the government is giving more power to the arms race because this strategy is not only limited to enhance nuclear arms but any weapon. Of course that budget is not going to be used for many other rograms as agriculture or health which are also important. </span>
5 0
3 years ago
What is a consumer product?
liraira [26]

Answer:

Final Good

Products that are bought by individuals or households for personal use.

3 0
2 years ago
Read 2 more answers
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