Question

Adding additional risky assets to the investment opportunity set will generally move the efficient frontier ________...

Adding additional risky assets to the investment opportunity set will generally move the efficient frontier ________ and to the ________.A) up; rightB) up; leftC) down; rightD) down; left

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

The correct answer is B

The Efficient frontier represents different sets of portfolio according to the expected returns on the investment and for the given level of risk. Portfolios that are on right side has higher level of risk with a defined risk and the securities on left side are optimal for the risk averse investors. But, when the additional risky assets are added to the investment opportunity the efficient frontier will tend to move upper side and to the left.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
The efficient frontier of risky assets is i) the portion of the investment opportunity set that...
The efficient frontier of risky assets is i) the portion of the investment opportunity set that lies above the global minimum variance portfolio. ii) the portion of the investment opportunity set that represents the highest standard deviations. iii) the portion of the investment opportunity set which includes the portfolios with the lowest standard deviation. iv) the set of portfolios that have zero standard deviation. Group of answer choices (i) (iv) (ii) (i) and (ii) are true. (iii)
Describe the steps to deriving the efficient frontier using: Risky assets only Risky AND Rf asset
Describe the steps to deriving the efficient frontier using: Risky assets only Risky AND Rf asset
Which of the following statement(s) is / are inaccurate? The efficient frontier is the set of...
Which of the following statement(s) is / are inaccurate? The efficient frontier is the set of all attainable risky assets with the: A. highest expected return for a given level of risk. B. lowest amount of risk for a given level of return. C. highest expected return relative to the risk-free rate. D. all of the above options are inaccurate.
When two assets have +1 correlation...        The investment opportunity set is the line connecting...
When two assets have +1 correlation...        The investment opportunity set is the line connecting the two assets. The assets’ covariance can be positive or negative. Knowing that one asset’s return is above its expected return tells you nothing about the other asset’s return. The Minimum Variance Portfolio’s return is the risk free rate.
Which of the following statements regarding a portfolio of two risky assets (with almost equal weights)...
Which of the following statements regarding a portfolio of two risky assets (with almost equal weights) is true? A. For this portfolio, if investors do not invest in a risk-free asset, the feasible set simply includes the upward curve starting from the global minimum variance portfolio. B. A portfolio without a risk-free asset cannot earn a higher return than a portfolio with risk-free assets if these two portfolios have the same risk. C. If investors invest in a risk-free asset,...
         3.   a)            When adding a risky asset to a portfolio of many risky assets, which...
         3.   a)            When adding a risky asset to a portfolio of many risky assets, which property of the asset                                 is more important, its standard deviation or its covariance with the other assets? Explain. b)            Suppose that the risky premium on the market portfolio is estimated at 8% with a standard deviation of 22%. What is the risk premium of a portfolio invested 25% in CEMENCO and 75% in Monrovia Breweries, if they have Betas of 1.1 and 1.25...
1.)In a universe with just two assets, a risky asset and a risk-free asset, what is...
1.)In a universe with just two assets, a risky asset and a risk-free asset, what is the slope of the Capital Allocation Line if the Expected return of the risky asset is 12.16% and the standard deviation of the returns of the risky asset is 19.25%. The return on the risk-free asset is 3.88%   2.)Peter Griffin calculates that his portfolio's risk, as measured by the standard deviation, is 21.96%. His portfolio is made up of many stocks from just two...
1.‘The rate of return is more appropriate for comparing the profitability of financial assets than absolute...
1.‘The rate of return is more appropriate for comparing the profitability of financial assets than absolute dollar profit.’ Do you agree with this statement?Explain. 2.‘The rate of return is the most important outcome for an investment.’ Do you agree with this statement?Explain. 3.Explain how the expected rate of return and the risk of an individual asset are measured. 4.Explain how the expected rate of returnand the variance of a portfolio are calculated. 5.Explain what ‘covariance’ means. 6.Explain how the number...
.1. Which of the following is not a correct statement about accounting? a. Generally accepted accounting...
.1. Which of the following is not a correct statement about accounting? a. Generally accepted accounting principles (GAAP) is a set of accounting standards used in the preparation of financial statements. b. Financial Accounting Standards Board (FASB) is a private organization delegated by the Federal Reserve with the responsibility to establish the GAAP. c. Management accountants work with a business or nonprofit organizations, preparing reports and analyzing financial info. d. Public accountants provide a variety of accounting services for clients...
One of Jim O’Brien’s customers, Mid-West Supply, has presented him with an opportunity for a significant...
One of Jim O’Brien’s customers, Mid-West Supply, has presented him with an opportunity for a significant amount of freight moving into a new market for Hardee. Hardee is a truckload carrier primarily moving freight in east/west lanes in the United States, with some movements into Canada. Hardee has dispatch centers located throughout the United States which have some dock and warehousing capacity. The new move would be between Lincoln, NE and Miami, FL. Hardee has avoided this market because of...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT