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 .
It is the second answer 19 purchased
Answer:
B. levied on purchases of a particular good or service.
Explanation:
- A sales tax is a tax that is given to the government body and is provided to the production of the particular goods and the services and its a set of the sales.
- The crucial good and services and at the point of the purchase, and is directed by the consumers and is called as used tax. And includes the manufacturer's sales and wholesales tax and gross receipt and exercise tax and values added tax.
Answer:
a. have performance attributes that are difficult to ascertain at the moment of purchase
Explanation:
In case of an experience good, it is difficult to make predictions regarding its price and quality.
The reputation of a seller and word of mouth are the important things that customers can use to make decisions regarding purchasing of the product.
Experience goods are those which have performance attributes that are difficult to ascertain at the moment of purchase
Answer:
Microsoft was doing good till 1990's because there was no competition at that time and they were the only operation system known, but when internet market was getting other competitors Microsoft's risk increased they couldn't compete with them.
Explanation:
Systematic beta reflects the risk which is present in the market and difficult to avoid.
- Microsoft was doing great when and the reason they got on top was because there was no competitor so they weren't at risk.
- <em>But</em> since the technological industry is enhancing Microsoft didn't adapt to change and continued with their old strategy which led them at this condition as there risk is increasing they are highly volatile to the market.
