Question

What asset has a higher risk Gold or US equities?

What asset has a higher risk Gold or US equities?

Homework Answers

Answer #1

The asset with a higher risk is US equities in comparison of Gold. Many times the gold has outperformed the other asset classes including equity maker in US. The risk and return tradeoff is better for gold as it is considered one of the less risky asset classes for investors. The investment in gold is used as hedge against political instability or the devaluation of currency. Therefore whenever there is more uncertainty in equity market or it become riskier, the investors use to shift to gold investment as it is considered less risky.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Which of the following can be described as a ‘defensive’ asset class? A. Australian equities B....
Which of the following can be described as a ‘defensive’ asset class? A. Australian equities B. Overseas equities C. Property D. Alternative investments E. Debt securities
Compare and contrast the bond and equities markets. (hint: risk in each)
Compare and contrast the bond and equities markets. (hint: risk in each)
A portfolio invests in a risk-free asset and the market portfolio has an expected return of...
A portfolio invests in a risk-free asset and the market portfolio has an expected return of 7% and a standard deviation of 10%. Suppose risk-free rate is 5%, and the standard deviation on the market portfolio is 22%. For simplicity, assume that correlation between risk-free asset and the market portfolio is zero and the risk-free asset has a zero standard deviation. According to the CAPM, which of the following statement is/are correct? a. This portfolio has invested roughly 54.55% in...
c. Judy Chen is the primary portfolio manager of the global equities portfolio at Horizon Asset...
c. Judy Chen is the primary portfolio manager of the global equities portfolio at Horizon Asset Management. Lars Johansson, a recently hired equity analyst, has been assigned to Chen to assist her with the portfolio. Chen asks Johansson to evaluate Twin Industries, a privately owned U.S. company that may initiate a public stock offering. Johansson decides to use CAPM to estimate the required return on equity for Twin Industries. Johansson identifies a publicly traded peer company with an estimated equity...
To maximize your utility what would be your allocation in the risk-free asset? risk-free asset with...
To maximize your utility what would be your allocation in the risk-free asset? risk-free asset with a return of 15%, Standard Deviation of 40%, and risk-free asset with risk-free= 5%, Pab= -1
The world is back on the gold standard. The US central bank will convert US dollars...
The world is back on the gold standard. The US central bank will convert US dollars into gold at a rate of $6/oz. The European Central Bank will convert gold at €5/oz. 1. What is the theoretical direct (US dollars per Euro) cross-exchange rate between the US and the Euro zone? The market cross exchange rate is currently €0.67/$. 2. Which currency is undervalued relative to the other currency? You have $1,000, but you need to switch to euros in...
In 1971 the US government removed the dollar from the gold standard, because of this the...
In 1971 the US government removed the dollar from the gold standard, because of this the dollar became a “fiat” currency. A currency backed by only the full faith and credit in the issuing government. Given the uncertain economic outlook of the last few years, there’s been a growing chorus of voices that had been arguing for a return to the gold standard. One of the main beliefs here is that government spending (and issuance of currency) will be naturally...
Suppose a risk-free asset has a 3 percent return and a second risky asset has a...
Suppose a risk-free asset has a 3 percent return and a second risky asset has a 15 percent expected return with a standard deviation of 25 percent. Calculate the expected return and standard deviation of a portfolio consisting of 15 percent of the risk-free asset and 85 percent of the second asset. Provide your final answers up to two decimal points
Suppose a risk-free asset has a 3 percent return and a second risky asset has a...
Suppose a risk-free asset has a 3 percent return and a second risky asset has a 15 percent expected return with a standard deviation of 25 percent. Calculate the expected return and standard deviation of a portfolio consisting of 15 percent of the risk-free asset and 85 percent of the second asset. Provide your final answers up to two decimal points
The risk-free asset has a return of 2.84%. The risky asset has a return of 10.06%...
The risk-free asset has a return of 2.84%. The risky asset has a return of 10.06% and has a variance of 4.12%. Karen has the following utility function: LaTeX: U=a\times\ln\left(r_c\right)-b\times\sigma_cU = a × ln ⁡ ( r c ) − b × σ c, with a=5.1 and b=5.2. LaTeX: r_cr c and LaTeX: \sigma_cσ c denote the return and the risk of the combined portfolio. Compute the optimal to be invested in the risky asset.