Asset W has an expected return of 13.2 percent and a beta of 1.29. If the risk-f
ID: 2711075 • Letter: A
Question
Asset W has an expected return of 13.2 percent and a beta of 1.29. If the risk-free rate is 4.54 percent, complete the following table for portfolios of Asset W and a risk-free asset. (Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations. Enter your portfolio expected return answers as a percentage and round to 2 decimal places (e.g., 32.16). Round your portfolio beta answers to 3 decimal places (e.g., 32.161).)
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Asset W has an expected return of 13.2 percent and a beta of 1.29. If the risk-free rate is 4.54 percent, complete the following table for portfolios of Asset W and a risk-free asset. (Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations. Enter your portfolio expected return answers as a percentage and round to 2 decimal places (e.g., 32.16). Round your portfolio beta answers to 3 decimal places (e.g., 32.161).)
Explanation / Answer
ANSWER:
The larger the degrees of freedom, the lower the variance of t, so the smaller the tail probabilities are. This explains why the probability in Question 73 is smaller than that in Question 74.
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