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 .
Answer:
so are you in public school but just online for right now or are you actually in full online school?
Answer:Non- Programmed Decision
Explanation:
In deciding who to hire, L Brands executives had to consider multiple options, which made the decision poorly defined.
So also, the decision had huge important consequences for the company: Picking the wrong CEO could be very costly and may lead to it winding up.
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In the steps of the decision making process for major purchases, for me, the most difficult is the part of making the decision itself. Information are already gathered, the goals are presented as well as the consequences, but there are times that your actual decision is overpowered by self-interest instead of objectivity. Hope this helps.
