Let A, B, and C be three portfolios of securities available in the market. Their

Question

Let A, B, and C be three portfolios of securities available in the market. Their expected rates of return are: E(RA) = .10, E(RB) = .15, E(RC) = .20 The standard deviation of their rates of return are sigmaA= .20, sigmaB = .30, sigmaC = .35. Statement: At least one of these portfolios is not an efficient portfolio. Is this statement True, False, or uncertain? Explain your answer (assume there are no risk-free borrowing or lending opportunities). (Hint: plot the three portfolios on a mean-variance graph and look at the shape).

Explanation / Answer

its true

3. Within the framework of modern portfolio theory, if portfolios A and B have the ... the portfolio cannot be reduced below the standard deviation of the lower risk asset if the ... the demand curve, and therefore decreased interest rates. c) An outward .... [The expected returns on these assets are: Era=6.8%; Erb=5.2%; Erc=5%; ..

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