Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. (2) suppose in a hypothetical economy, there exist

(2) Suppose in a hypothetical economy, there exist two financial assets A and B, and...

80.2K

Verified Solution

Question

Finance

image

(2) Suppose in a hypothetical economy, there exist two financial assets A and B, and their returns are perfectly negative correlated with PAB = -1. The following information is also given: E(ra) = 8%, E (TB) = 2%, OA - 15%, OB = 9%. What is the equilibrium risk- free rate in this economy? (6 points)

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Finance
1.2K views

McCormick & Company is considering a project that requires an initial investment of $24 million to...

Statistics
1.2K views

Assume that the following pattern holds true through future generations in a certain country: 60% of...

Finance
1.2K views

1) what are the different bind ratings and what do they mean 2) If a bond’s rating...

Biology
1.2K views

Based on the anatomy of the male, explain why an enlarged prostate would make urination...

Physics
1.2K views

9 Two concentric uniformly charged spherical shells of radius 10cm and 20cm having charges 10C...

Physics
1.2K views

At time t 0 a 2290 kg rocket in outer space fires an engine that...

Basic Math
1.2K views

What is the name of the argument to hist that specifies the number of bins...

Basic Math
1.2K views

The route that a trolley takes around a city can be represented by the functions...

Calculus
1.2K views

Sketch the triangle LA 30 2C 75 b 14 B 75 14 30 75 C...

Algebra
1.2K views

From the given proportional relationship which of the following point lie on the same line...

Accounting
1.2K views

prepare a statement of cash flow (indirect method) for they year ended December 31, 2010...

Accounting
1.2K views

Using profitability index allows management to rank projects of similar risk with different initial investment...