2) If you wish to have a portfolio with zero risk, you would invest 100% in Asse

Question

2) If you wish to have a portfolio with zero risk, you would invest 100% in Asset J

3) If you want to change proportions to invest in the assets so that the portfolio has zero risk, the expected return of the resulting portfolio is 3%

4) If you want to decrease the rsik (standard deviation) of the the portfolio, you will increase the proportion to invest in asset J and reduce the proportions in Assets K and/or L

5) the risk free rate is 5%

6) if you want to decrease the risk (standard deviation) of the portfoilio, you will decrease the proportion to invest in aset J and increase the proportions in Assets K and/or L

7) If you want to increase the risk (standard deviation) of the portfolio, you will increase the proportion to invest in asset L and reduce the proporitons in Assets J and/or K

8) If you want to increase the risk (standard deviation) of the profolio, you will increase the proportion to invest in asset J and reduce the proportions in Assets K and/or L

You are presented with information on expected returns and standard deviations for 2 assets and a portfolio that was formed with equal proportions of each asset. Asset J Asset K 0.0800 0.0914 Asset L 0.1200 0.0842 Portfolio Expected return0.03 0.0767 Variance 0.0566 Which of the following statements is true (there are several, select all that are correct):

Explanation / Answer

1) false.The current portfolio consists of 33.33% of each asset.asset L gives a higher return of 12%. So to increase the portfolio return from the current 7.67% to 11%, we should inrease the proportion invested in L to more than 33.33%

2) true. because asset J has zero risk

3) true because the investment will be made entirely in asset J which has zero risk

4) true

5) false

6)false

7)false.if you want to increase the risk, inccrease the investment in asset K

8)false

Related Questions

Navigate

• Browse (All)
• Browse 2
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.