Calculate the estimated expected return and standard deviation of the returns on the following investment portfolios. Show your working. (10%) 2.

1. Calculate the estimated expected return and standard deviation of the returns on the following investment portfolios. Show your working.

(10%)

2. Calculate the utility scores of two investors who currently hold all their wealth in Portfolio P. Investor 1 has a coefficient of risk aversion of 4: investor 2 has a coefficient of risk aversion of 8. Interpret these utility scores. Show your working.

(15%)

3. Sketch indifference curves for these two investors onto one set of axes. Use the utility scores you calculated in part b). Mark Portfolio P onto your diagram. Explain how the relative convexity of the curves is related to the risk aversion of the investors. Show your working.

(15%)

4. Assume that portfolio Q is now made available to these investors. Calculate their utility scores from this portfolio. Mark the portfolio onto your diagram. Based on the calculated utility scores, and on your diagram, explain which of the two portfolios each investor would prefer. If the two investors have the same preference, explain why this is the case. If the two investors differ in their preferences, explain why this is the case.Show your working.

(15%)

5. A third investor would be indifferent between portfolios P and Q. Calculate the coefficient of risk aversion of this third investor, based on this observation. Add the indifference curve of the third investor to the diagram, based on the utility score she would derive from either of these two portfolios.Show your working.

(15%)

6. Now form an investment portfolio R, which is an equally weighted combination of P and Q. Calculate the expected return and standard deviation of portfolio R. Evaluate portfolio R from the point of view of each of your three investors. Interpret your answer.Show your working.

(15%)

7. Identify and explain three limitations of your analysis.

(15%

Show more

Calculate Your Essay Price
(550 words)

Approximate price: $22

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
$26
The price is based on these factors:
Academic level
Number of pages
Urgency
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more