1) As numbers of assets whose returns are not completely related are added to the portfolio the risk of portfolio will reject. Amount of risk lessening which can be attained is limited. Suppose that association coefficients between assets are not minus 1.
2) When a market is well-organized prices in a market will ultimately reflect all available information. Some markets are more resourceful than others and information more voluntarily reflected in asset prices.
3) Investor who purchases one year treasury notes in year one and then rolls over principal into new investments in 1 year treasury notes every year for 30 years will have locked in assured annual rate of return for 30 years.
4) prepare down the major determinants of interest rates? prepare down the factors that are more significant than the others? Why? What factors influence demand for money?
Min Pages: 1
Max Pages: 2
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