You are considering a risky investment that you expect will either be worth 165,000 in...
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You are considering a risky investment that you expect will either be worth 165,000 in 1 year, or 95,000 , with probabilities of 0.6 and 0.4 for each outcome, respectively. You could invest in riskless T-bills at 0.047. If you invest in this risky investment, you would expect to earn a risk premium of 0.073 Given this information, what would you be willing to pay for this investment? \begin{tabular}{l} 118,358 \\ \hline 109,991 \\ \hline 106,615 \\ \hline 122,321 \\ \hline 113,881 \end{tabular} Question 1 0.5 pts When examining the returns of securities, standard deviation is a measure of default risk total risk the equity risk premium business risk beta Question 3 0.5pts What would be TRUE regarding a security with a LOW Sharpe ratio relative to similar investments? The return as risk premium - relative to its risk is low It provides a relatively high return compared to similar investments If combined with risk-free assets in a Complete Portfolio, the Sharpe would be higher It provides a relatively low risk return This is insufficient information to compare with other securities
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