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Domination of security

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Assume that you are currently holding security O, and that (E , ) = (7, 3).
You are considering a portfolio consisting of risk free security F with RF = 3, and a risky
security I with (ERI, ) = (10, 4). The objective is to equalize the risk of this portfolio to
the risk of security O.

Does a portfolio dominates security O.
If it does, decide can I decide how an investment of $100,000 should be distributed among securities F and I.

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The expert examines portfolio dominate security. The investment of distributed among securities are found.

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Assume that you are currently holding security O, and that (E , ) = (7, 3).
You are considering a portfolio consisting of risk free security F with RF = 3, and a risky
security I with (ERI, ) = (10, 4). The objective is to equalize the risk of ...

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  • MS, University of Wisconsin-Madison
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