Why 25

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Unformatted text preview: 21 on the graph (label the portfolio P). Draw an EV frontier that would result from including assets A and B in different proportions. 23. Draw another EV frontier with a correlation coefficient of zero. Label this EV frontier (zero) to distinguish it from the EV frontier in 22. Name: _________________________________ 24. Which of the EV frontiers from questions 22 and 23 would an investor prefer? Why? 25. Suppose that investors acted as if the correlation coefficient was zero when in fact the true correlation coefficient was .7. What errors would be made? Name: _________________________________ Use the Bloomberg Businessweek article entitled “Italy, Spain Lead Debt Slump on Bets ECB Won’t Buy More Bonds” 26. What happened to the prices and yields of Italia...
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