Three portfolios have the following expected returns and risk: Portfollo Jones Kelly Lewis Expected return 4% 6% 7% Standard deviation 2% 5% 8% A risk-averse investor choosing from these portfolios would not rationally select: Multiple Choice Lewis Any of the portfolios could be chosen. О Jones О Kelly
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- The following figures show the optimal portfolio choice for two investors with different levels of risk-aversion graphically. Which statement is correct? E[R] 0.3 0.25 0.2 0.15 0.1 0.05 0 0 0.05 0.1 0.15 Figure 1 0.2 0.25 0.3 0.35 0.4 0.45 o (R) E[R] Figure (1) shows an investor with a conservative investment behavior. 0.3 0.25 0.2 0.15 0.1 0.05 0 0 Figure (2) shows an investor that borrows in risk-free rate and invests in the risky asset. 0.05 0.1 0.15 In the optimal point of both figures, the highest indifference curve is tangent to the efficient frontier. O In Figure (1), more aggressive investment decision led to a higher Sharpe ratio. Figure 2 0.2 0.25 o(R) 0.3 0.35 0.4 0.45Suppose all investors use the market perceptions of risk and expected return and are thus using the same set of efficient portfolios. 1-Draw the efficient set of portfolios and the CML for the optimal portfolio. 2-Explain why all investors should choose the same risky portfolio from the efficient set 3-Identify on the CML two investors; one who is risk averse and one who is notThe optimal proportion of the risky asset in the complete portfolio is given by the equation below y*= E(Rp− Rf) A0² For each of the variables on the right side of the equation, discuss the impact of the variable's effect on y* and why the nature of the relationship makes sense intuitively. Assume the investor is risk averse
- Use attachments to answer questions This question relates to Diagram 5 from the 9.2 diagrams, which shows four different feasible portfolios plotted on a set of risk/return axes. Which portfolio would a risk-averse investor prefer - Portfolio A or Portfolio G? Select one: a. Portfolio A. b. Portfolio G. c. The investor would be indifferent between the two portfolios. d. We cannot tell without more information about the investors attitude towards risk (i.e. how risk-averse the investor is).Which two portfolios lie on the same indifference curve? Ignore feasibility. Expected Return, E(r) OH and G OH and F O F and E 0 2 4 3 H O G and E O No two portfolios lie on the same indifference curve G 4 3 N E Capital Allocation Line (CAL) Risk, od. Calculate the portfolio return for each alternative.e. Calculatethe portfolio standard deviation for each f. Based on the answer in d) and e), which alternatives is the best for Aisyah to choose? Justify your answer.Note: No need excle formula and d no question answer .i just need e,f no question no answer. thank you sir
- Which of the following statements is correct concerning a mean-variance efficient portfolio of risky assets in a world where there is also a risk-free asset? OA. It will be impossible to form a different portfolio yielding a lower level of risk unless the portfolio also earns a lower return, O B. Risk averse investors will only choose to invest in the market portfolio (M) regardless of the risk-free rate. OC. The portfolio will always achieve the maximum possible returns. O D. The portfolio will always be inside the feasible set.Give typing answer with explanation and conclusion You have a client that is concerned about minimising downside risk. She would like to choose a portfolio that minimises the probability of a return below the risk free rate. You are given 3 portfolios with varying expected returns and standard deviations. How would you choose the most appropriate portfolio for the client? Please provide an example.For a risk-averse investor, which of the following portfolios would be preferred? Portfolio B, with a Sharpe Ratio of 3. Portfolio A, with a Sharpe Ratio of 4. Portfolio D, with a Sharpe Ratio of 1. Portfolio C, with a Sharpe Ratio of 2.
- Construct a plausible graph that shows risk (asmeasured by portfolio standard deviation) on thex-axis and expected rate of return on the y-axis.Now add an illustrative feasible (or attainable) setof portfolios and show what portion of the feasibleset is efficient. What makes a particular portfolioefficient? Don’t worry about specific values whenconstructing the graph—merely illustrate howthings look with “reasonable” dataWhich one of the following Value-at-Risk measures would be most appropriate for a portfolio designed for a very risk-adverse investor? Multiple Choice Prob (Rp ≤ − .20) = 100% Prob (Rp ≤ − .15) = 50% Prob (Rp ≤ − .10) = 25% Prob (Rp ≤ − .10) = 10% Prob (Rp ≤ − .05) = 1%Jason Jackson is attempting to evaluate two possible portfolios consisting of the same five assets but held in different proportions. He is particularly interested in using beta to compare the risk of the portfolios and, in this regard, has gathered the following data: LOADING... . a. Calculate the betas for portfolios A and B. b. Compare the risk of each portfolio to the market as well as to each other. Which portfolio is more risky? Question content area bottom Part 1 Data table (Click on the icon here in order to copy its contents of the data table below into a spreadsheet.) Portfolio Weights Asset Asset Beta Portfolio A Portfolio B 1 1.35 17% 29% 2 0.69 26% 8% 3 1.24 10% 22% 4 1.06 11% 20% 5 0.87 36% 21% Total 100% 100% a. The beta of portfolio A is enter your response here. (Round to three…