Essay
The optimal proportion of the risky asset in the complete portfolio is given by the equation y* = [E(rP) - rf]/(.01A times the variance of P).For each of the variables on the right side of the equation, discuss the impact of the variable's effect on y* and why the nature of the relationship makes sense intuitively.Assume the investor is risk averse.
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The optimal proportion in y is the one t...View Answer
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