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NEW QUESTION: 1
Millennium Investments (MI), an investment advisory firm, relies on mean-variance analysis to advise its clients. Mi's advisors make asset allocation recommendations by selecting the mix of assets along the capital allocation line that is most appropriate for each client.
One of MPs clients, Edward Alverson, 60 years of age, requests an analysis of four risky mutual funds (Fund W, Fund X, Fund Y, and Fund Z). After examining the four funds, MI finds that all four mutual funds are equally weighted portfolios, and that all of the funds, except Fund Z, are mean-variance efficient. MI also finds that the correlations between all pairs of the mutual funds are less than one.
MI calculates the average variance of returns across all assets within each mutual fund, the average covariance of returns across all pairs of assets within each mutual fund, and each mutual fund's total variance of returns. The results of Mi's calculations are reported in Exhibit 1.

During his meeting with the MT advisors, Alverson explains that he will retire soon, and, consequently, is highly risk-averse. Alverson agrees with Mi's reliance on mean-variance analysis and makes the following statements:
Statement 1: All portfolios lying on the minimum variance frontier are desirable portfolios.
Statement 2: Because I am highly risk-averse, I expect that my investment portfolio on the capital allocation line will have risk and return equal to that of the global minimum variance portfolio.
MI operates under the assumption that all investors agree on the forecasts of asset expected returns, variances, and correlations. Based on these assumptions, MI created the Millennium Investments 5000 Fund (MI-5000), which is a market value-weighted portfolio of all assets in the market. MI derives the forecasts for the MI-5000 Fund and for a fund comprising short-term government securities shown in Exhibit 2.

Alverson asks MI to examine the risk-return characteristics for an equal-weighted combination of Funds Y and Z MI should conclude that the:
A. expected return on the equal-weighted combination will exceed the arithmetic average of the Fund Y and Fund Z expected returns.
B. expected return on the equal-weighted combination will be less than the arithmetic average of the Fund Y and Fund Z expected returns.
C. standard deviation on the equal-weighted combination will be less than the arithmetic average of the Fund Y and Fund Z standard deviations.
Answer: A
Explanation:
Explanation/Reference:
Explanation:
The expected return on a portfolio of two assets equals:


this will equal the average of the two standard deviations only if the
correlation between Funds Y and Z equals +1. MI already determined that the correlation of returns between Funds Y and Z is less than +1. Therefore, the equally weighted portfolio combination of Funds Y and Z will have a standard deviation that is less than the arithmetic average of the Fund Y and Z standard deviations. (Study Session 18, LOS 64.a)

NEW QUESTION: 2
John wants to place the Quick Access Toolbar below the Ribbon. Mark the option that he should choose to accomplish the task.
Answer:
Explanation:

NEW QUESTION: 3
Divide the overall maximum bandwidth by the number of online IPs and use the resulting value as the maximum bandwidth per IP. Which of the following options belongs to this bandwidth allocation method?
A. Dynamic sharing
B. Strategy Sharing
C. Exclusive strategy
D. Bandwidth reuse
Answer: A