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Jabi, Lecturer
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Experience:  I have done MBA in Finance and Accounting.
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a. Suppose you own $1 million worth of 30-year Treasury

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a. Suppose you own $1 million worth of 30-year Treasury bonds. Is this asset riskless? Explain your answer.

b. You own $1 million worth of 90-day Treasury bills. You “roll over” this investment every 90 days by reinvesting the proceeds in another issue of 90-day Treasury bills. Is this investment riskless? Explain your answer.

c. Can you think of an asset that is truly riskless? Discuss it.
d. Common stock A has an expected return of 10%, a standard deviation of future returns of 25%, and a beta of 1.25. Common stock B has an expected return of 12%, a standard deviation of future returns of 15%, and a beta of 1.50. Which stock is riskier? Explain.

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Edited by Jabi on 10/9/2010 at 4:53 AM EST
Jabi and 2 other Homework Specialists are ready to help you
Customer: replied 6 years ago.
Need math calculation on part D.

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