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The following information is available for three mutual funds: Mutual r Fund E(r) s A B C A 9.20% 29.00% 1 0.61 0.64 B 7.00% 27.00% 1 0.56 C 11.00% 40.00% 1 (a) Calculate the weights of a portfolio of...

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Question

Finance

The following information is available for three mutualfunds:

Mutual

r

Fund

E(r)

s

A

B

C

A

9.20%

29.00%

1

0.61

0.64

B

7.00%

27.00%

1

0.56

C

11.00%

40.00%

1

(a) Calculate the weights of a portfolio of mutual funds B and Cthat has the same expected return

as mutual fund A.

(b) Does the portfolio of B and C dominate mutual fund A?Perform the necessary calculations to

answer the question.

Answer & Explanation Solved by verified expert
4.0 Ratings (721 Votes)
a We need to calculate the weights of mutual fund B and C in a portfolio that has the same expected return as A Weight of Mutual fund B in the portfolio WB    See Answer
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Transcribed Image Text

The following information is available for three mutualfunds:MutualrFundE(r)sABCA9.20%29.00%10.610.64B7.00%27.00%10.56C11.00%40.00%1(a) Calculate the weights of a portfolio of mutual funds B and Cthat has the same expected returnas mutual fund A.(b) Does the portfolio of B and C dominate mutual fund A?Perform the necessary calculations toanswer the question.

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