project 1 - Dr. Jones Bus 172B MW12:00 Project 1:...

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Dr. Jones Bus 172B MW12:00 Project 1: Optimization Project 1. The Market portfolio would have a Standard Deviation of about 16.41% and the expected return would be 16.52%. The equation for the CML= Risk Free + [Sharpe Ratio (Standard Deviation)] 5% risk free+[ .702478 sharpe ratio (16.41% Sd)] 2. I selected this point because I would be satisfied with the market return and risk trade off. I probably would not be happy about it but I would have a fairly low risk until I figure out the optimal point. For this exercise, I will say that the return I would like to have would be 18%. With an expected return of 18% the risk I would have to take on would be about 18.5%. I selected this point because I have to start somewhere and learn as I go. I have no dependents and very little debt, so I can take on a lot more risk. 3. The sharpe ratio is .702478. 4. The sharpe ratio turned out to be the same for all of them, so it did not change the way I think about the optimum portfolio. 5.
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This note was uploaded on 09/08/2010 for the course BUS 172B at San Jose State.

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project 1 - Dr. Jones Bus 172B MW12:00 Project 1:...

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