Give typing answer with explanation and conclusion Consider the following characteristics of stocks A and BAssetAB0.060.03Excess Return-E(R)Variance 0²0.080.04Covariance-Cov(TA. TB)Which of the following portfolio(s) is the optimal risky portfolio constructed by these two assets?0.05O a. The portfolio with 65 percent in A and 35 percent in BO b. The portfolio with 35 percent in A and 65 percent in BO c. The portfolio with 73 percent in A and 27 percent in BOd. The portfolio with 52 percent in A and 48 percent in BOe. It is not possible to tell from the information provided

The optimal portfolio consists of a risk-free asset and an optimal risky asset portfolio. The…

Consider the following characteristics of stocks A and B Asset A B Excess Return-E(R) 0.06 0.08 Variance-02 0.03 0.04 Covariance-Cov(TA. TB) 0.05 Which of the following portfolio(s) is the optimal risky portfolio constructed by these two assets?

Consider the following characteristics of stocks A and B Asset A B Excess Return-E(R) 0.06 0.08 Variance-02 0.03 0.04 Covariance-Cov(TA. TB) 0.05 Which of the following portfolio(s) is the optimal risky portfolio constructed by these two assets?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 6P

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Concept explainers

Portfolio Management

Portfolio management is the process by which an investor decides that how the person will invest in a variety of assets in order to get a desired return in the future. A portfolio means a pool of assets that includes securities, bonds, and other investment instruments which helps in risk minimization of the money that has been invested. In other words, it can be said that a portfolio means a combination of assets in which an investor decides to invest their money in order to get a lump sum return in the future or even a series of cash flow that the person is expecting at the end of their job life.

Question

Give typing answer with explanation and conclusion

Consider the following characteristics of stocks A and B
Asset
A
B
0.06
0.03
Excess Return-E(R)
Variance 0²
0.08
0.04
Covariance-Cov(TA. TB)
Which of the following portfolio(s) is the optimal risky portfolio constructed by these two assets?
0.05
O a. The portfolio with 65 percent in A and 35 percent in B
O b. The portfolio with 35 percent in A and 65 percent in B
O c. The portfolio with 73 percent in A and 27 percent in B
Od. The portfolio with 52 percent in A and 48 percent in B
Oe. It is not possible to tell from the information provided

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