Which two portfolios lie on the same indifference curve? Ignore feasibility. Expected Return, E(r) N 4 3 н, G 4 3 E Capital Allocation Line (CAL)

Which of these are true about the Security Market Line and Capital Market Line models? 1. the intercepts are the same 2. the independent variable for the Capital Market Line is beta 3, the Capital Market Line applies to portfolios only O 1 and 2 only O 2 only O 1 and 3 only O 2 and 3 only O 3 only

A diagram of the CML and SML for the market M, risk-free asset ry, an inefficient portfolio P, and a complete portfolio C is shown below. The diagram is not to scale. E(r) E(13) CML & CALP E(12) P C E(r) M 01 02 03 P βρ SML M Вм The values of the labeled variables are E[1] = 3.0%, E[12] = 10.3%, E[3] = 16.7%, σ₁ = 17.9%, σ = 30.0%, 03 = 44.3%. What is the standard deviation of nonsystematic risk for the complete portfolio σc under the CAPM? O a. 0.1374 O b. 0.1180 O c. 0.0988 d. 0.1105 O e. 0.0791 O f. 0.0913 Og. 0.0858 O h. 0.1443

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If the internal rate of return (IRR) of a well-behaved investment alternative is equal to MARR, which of the following statements about the other measures of worth for this alternative must be true? i. PW = 0 ii. AW = 0. Solve, a. I onlyb. II only c. Neither I nor II d. Both I and II.

Calculate the optimal risky portfolio for the following cases when short-sales are allowed. Compute its expected return and the standard deviation of its returns. 1. Two risky assets: Rp = 3, R' = [6, 9], and 4 5 5 20 2. Three risky assets: Rp = 4, R' = [5,9, 8], and [10 0 0 E=0 40 0 0 20 3. Three risky assets: Rp = 5, R' = [12, 9, 8], and 40 10 -5] E= 10 20 0 5 0 30 4. Five risky assets: Rp = 2, R' = [5, 3, 18, 9, 2], and %3D 2 16 0. -12 5 -12 20 16 10 7 14 27 14 9. -13 8. 7 27 13

You plan to analyze the value of a potential investment by calculating the sum of the present values of its expected cash flows. If the discount rate decreases the it would lower the calculated value of the investment.   Group of answer choices   True False

Which one of the following is a property of a pure arbitrage portfolio?a. Negative investment.b. Zero return.c. Positive systematic risk.d. Zero total risk.

Explain the meaning and differences between the correlation coefficients “p” in the traditional portfolio and the beta “B” coefficients in the capital asset pricing model (CMPL) approach

In order to create an efficient set of portfolios thru optimization using concepts from Markowitz portfolio theory, you would need to forecast only 2 variables including expected return and standard deviation or variance for the asset classes or securities in focus. True or false