Document 4
Please show all of your work.
Remember to input your answer without a dollar sign ($) or a comma (,), and only up to 4 decimal places (i.e. 0.50)
For all these questions, suppose that the
oad index portfolio has an expected return of 10% and a volatility of 20%.
The risk-free rate is 2%. What is the expected return of a 50/50 portfolio of the risk-free asset and the
oad index portfolio?
The risk-free rate is 2%. What is the volatility of a 50/50Â Â portfolio of the risk-free asset and the
oad index portfolio?
What is the
oad index’ Sharpe ratio?
Consider the following events, and decide if they are representative of systematic or idiosyncratic risk.
Put either systematic or idiosyncratic in the blanks below.Â
You drill for an oil well in a previously well scouted region, but come up empty handed.
You drill for an oil well in a previously well scouted region, but come up empty handed.
Your CEO / CFO are accused of fraud, and the accounting firm finds a large amount of fake revenue on the books.
Your government unilaterally increases tariffs on a
oad swath of imports, and a host of other countries react with retaliatory tariffs on a similar
oad swath of products they import
A huge financial crisis occurs, with several large banks going under in disorganized fashion.