Find out what is optimal distribution of investment funds

Assignment Help Finance Basics
Reference no: EM132199811

Question - Let's assume that we live in a world where investors want returns that are disproportionately higher for each extra unit of risk.

For example, if an investor can choose between an investment that has a return of 8% and risk of 3% or an investment that has a risk of 6% (double that of the first investment), then the return of the second investment has to be MORE than double than that of the first investment.

Can we set up a linear optimization problem to find out what is the optimal distribution of investment funds between these two investments? Why or why not?

Reference no: EM132199811

Questions Cloud

How specifically the area supports language development : Explain how specifically the area supports language development.Describe the activity or experience that the children can specifically be engaged in.
Why is colorblindness problematic : Colorblindness is problematic because it could lead teacher to believe or portray that they are being fair, impartial, by seeing no differences between students
Determine how they became a journalist : Research And Report On Famous Media Personal (Hill&Knowlton). How they became a journalist. Include any special pioneering aspects of their career
Develop a behavioral intervention plan : Recently, Paulina and the bus driver exchanged words about Paulina's seat on the bus. Paulina proceeded to call the bus driver several inappropriate names.
Find out what is optimal distribution of investment funds : Can we set up a linear optimization problem to find out what is the optimal distribution of investment funds between these two investments
What is the aggregate sales forecast for products : What is the aggregate sales forecast for products A & B?
Summarizing and examining different points of view : Summarizing and examining different points of view. Summarize the articles you picked. Write one paragraph. Identify the sources by title and author
What are the minimum and maximum time values of money : Your Company has had a good year and has extra money for projects. What are the minimum and maximum time values of money that favor the drilling
Do you consider yourself a lifelong learner : How might you use the cognitive taxonomy to ensure that the identified instructional needs will be addressed during the instruction?

Reviews

Write a Review

 

Finance Basics Questions & Answers

  Identify general-purpose statements and communication

Read the following situations and write a general-purpose statement and a specifi c communication objective-the results you want-for each.

  Explain five categories of external risk assessment

Question 1: What are some non-government organizations, and do they have the same international human resource management issues? Question 2: List and explain five categories of external risk assessment which need to be addressed by a multinationa..

  How much would you have exactly five years from now

How much would you have exactly 5 years from now if you deposit $100 today, $200 at the end of this year and another $200 2 years from now.

  Explain the differences among the following terms related

explain the differences among the following terms related to financial failurea. technical insolvencyb. legal

  What is the ytm

Stone Sour Corp. issued 15-year bonds 2 years ago at a coupon rate of 7.90 percent. The bonds make semiannual payments. If these bonds currently sell for 109 percent of par value, what is the YTM?

  Confidence interval for the population

After discussion with representatives, you determine that they are calculating Standard Deviation as you desire, but you are concerned that they had a sample

  Expected rate of return on the market portfolio

Suppose you believe that the beta of the firm is .7. How much is the firm worth if the risk-free rate is 2% and the expected rate of return on the market.

  What is the portfolio beta

What is the portfolio's beta? Do not round your intermediate calculations. Round the final answer to 2 decimal places.

  Various techniques of inventory management

An investor is thinking of investing in a recurring deposit scheme that offers an interest rate of 12% per annum

  Application report 1 prepare a 1-2 page report single

application report 1 prepare a 1-2 page report single spaced that compares the finances of honda motors hmc to the

  Yourself one seat on the board of directors

If the company uses cumulative voting procedures, how much will it cost to guarantee yourself one seat on the board of directors? (Do not round intermediate calculations and round your answer to the nearest whole dollar amount. (e.g., 32))

  Cost of capital suppose a firm uses its company cost of

cost of capital suppose a firm uses its company cost of capital to evaluate all projects. will it underestimate or

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd