FE445 Homework 03 Solutions

Capital allocation line 4 you are considering adding

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Unformatted text preview: et D. capital allocation line 4. You are considering adding a new security to your portfolio. In order to decide whether you should add the security you need to know the security's _______. I. expected return II. standard deviation III. correlation with your portfolio A. I only B. I and II only C. I and III only D. I, II and III 5. Rational risk-averse investors will always prefer (complete) portfolios _____________. A. located on the efficient frontier to those located on the capital allocation line B. located on the capital allocation line to those located on the efficient frontier C. at the minimum variance point on the efficient frontier D. that are risk-free to all other asset choices...
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This document was uploaded on 02/18/2014.

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