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Unformatted text preview: • Portfolio = a collection of assets/investments Practice Problem • I have a risky asset available with r m = 0.2, r f =0.1 and σ m = 0.1, and suppose I borrow against all my money and put 200% of my money in the risky asset. – What is the expected return of my portfolio? – What is the standard deviation of my portfolio? – What is my portfolio budget line? Same setup: r m = 0.2, r f =0.1 and σ m = 0.1 • Suppose I have utility: – How much of the risky asset will I buy? • Which of the following assets would be better than my initial asset above? (assume you can only buy one at a time) x x x x r r u σ 2 ) , (=...
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This note was uploaded on 06/16/2011 for the course ECON 321 taught by Professor Murray during the Spring '11 term at South Carolina.
 Spring '11
 MURRAY

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