Suppose that it is impractical to use all the assets that are incorporated into a specified...

Suppose that it is impractical to use all the assets that are incorporated into a specified portfolio (such as a given efficient portfolio). One alternative is to find the portfolio, made up of a given set of n stocks, that tracks the specified portfolio most closely—in the sense of minimizing the variance of the different returns. Specifically, suppose that the target portfolio has (random) rate of return rM. Suppose that there are n assets with (random) rates of return r1, r2, … rn. We wish to find the portfolio rate of return: r = α1r1+ α2r2 + … + αnrn (with ∑_(i=1)^n▒αI = 1) minimizing var(r - rM) Find a set of equations for the αn’s Although this portfolio tracks the desired portfolio most closely in terms of variance, it may sacrifice the mean. Hence a logical approach is to minimize the variance of the tracking error subject to achieving a given mean return. As the mean is varied, this results in a family of portfolios that are efficient in a new sense, say tracking efficient. Find the equations of the αi’sthat are tracking efficient.

Expert Solution

Colby Messinger answered 2 years ago

Calculate the total depreciation for these various assets - All assets are business use. a. Joe...

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Calculate the total depreciation for these various assets - All assets are business use. Joe purchased...

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Caillou Guiliano Incorporated recently reported the following information: (Sales )/(Total Assets) : 2.25 Return on Assets...

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Nash Ltd, incorporated in 2019, has these transactions related to intangible assets in that year: ...

Nash Ltd, incorporated in 2019, has these transactions related to intangible assets in that year: 1 January Purchased patent (10-year life) for $408,980 1 July Acquired an existing 6-year franchise (expiration date 1 July 2025) for $352,440 All costs incurred were for cash and included GST of 10%. Amortisation is calculated on a straight line basis. Required a) Prepare the journal to record the purchase of the patent. b) Prepare the journal to record the purchase of the...

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