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Invest 50% in risk free. 50% in asset F. F has mean 7.5% and stdev 6%. Risk free rate is 5

Invest 50% in risk free. 50% in asset F. F has mean 7.5% and stdev 6%. Risk free rate is 5

Invest 50% in risk free. 50% in asset F. F has mean 7.5% and stdev 6%. Risk free rate is 5%. Expected return should be 15%

Please explain how the first equation above solves to 4? (Problem has to do with optimal investment in risky assets and borrowing in risk free assets)

0.075 ITF 0.05110 0.15 1 TIF IT0

Abhinav 04-Dec-2019

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