« previous next »

Author Question: It is typically easy to determine a precise mix of optimal debt and equity. Indicate whether the ... (Read 44 times)

Brittanyd9008

  • Hero Member
  • *****
  • Posts: 500
on: Jul 11, 2018
It is typically easy to determine a precise mix of optimal debt and equity.
 
  Indicate whether the statement is true or false

Question 2

Investment A has an expected return of 14 with a standard deviation of 4, while investment B
  has an expected return of 20 with a standard deviation of 9. Therefore,
 
  A) rational investors could pick either A or B, depending on their level of risk aversion.
  B) a rational investor will pick investment B because the return adjusted for risk (20 - 9) is
  higher than the return adjusted for risk for investment A (14 - 4).
  C) a risk averse investor will definitely select investment A because the standard deviation is
  lower.
  D) it is irrational for a risk-averse investor to select investment B because its standard deviation
  is more than twice as big as investment A's, but the return is not twice as big.


tandmlomax84

  • Sr. Member
  • ****
  • Posts: 323
Reply #1 on: Jul 11, 2018
Answer to Question 1

FALSE

Answer to Question 2

A


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
« previous next »
 

Did you know?

Carbamazepine can interfere with the results of home pregnancy tests. If you are taking carbamazepine, do not try to test for pregnancy at home.

Did you know?

Cutaneous mucormycosis is a rare fungal infection that has been fatal in at least 29% of cases, and in as many as 83% of cases, depending on the patient's health prior to infection. It has occurred often after natural disasters such as tornados, and early treatment is essential.

Did you know?

Vital signs (blood pressure, temperature, pulse rate, respiration rate) should be taken before any drug administration. Patients should be informed not to use tobacco or caffeine at least 30 minutes before their appointment.

Did you know?

Cancer has been around as long as humankind, but only in the second half of the twentieth century did the number of cancer cases explode.

Did you know?

Famous people who died from poisoning or drug overdose include, Adolf Hitler, Socrates, Juan Ponce de Leon, Marilyn Monroe, Judy Garland, and John Belushi.

In 2009, historian Woody Holton described how Abigail Adams shrewdly invested in the Continental Con In 2009, historian Woody Holton described how Abigail Adams shrewdly invested in the Continental Con
Electronic digital thermometers are accurate and easy to read. Electronic digital thermometers are accurate and easy to read.
Creating Easy-to-Read Instruction Creating Easy-to-Read Instruction
Given the values of sin θ, determine the values of θ over the interval [0, 2pi] Given the values of sin θ, determine the values of θ over the interval [0, 2pi]
Algebraically determine the x intercept of the exponential function Algebraically determine the x intercept of the exponential function
How to calculate the DRT to determine which is more effective against the pathogen How to calculate the DRT to determine which is more effective against the pathogen
Video: Types of antimicrobial substances (interferons & complement protein)

For a complete list of videos, visit our video library