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A t-bill pays 6 percent rate of return. would risk-averse investors invest in a risky portfolio that pays 12 percent with a probability of 40 percent or 2 percent with a probability of 60 percent?

Respuesta :

As t-bill pays 6 percent rate of return. would risk-averse investors invest in a risky portfolio that pays 12 percent with a probability of 40 percent or 2 percent with a probability of 60 percent, it's a No, because they are not rewarded with a risk premium.

What is rate of return?

  • The net gain or loss of an investment over a given time period, stated as a percentage of the investment's starting cost, is known as a rate of return (RoR).
  • You determine the percentage change from the start of the period to the end when computing the rate of return.
  • Any type of investment instrument, including real estate, bonds, equities, and fine art, can be subject to a rate of return (RoR).

Any asset can be used with the RoR as long as it is purchased once and generates cash flow at some point in the future. The attractiveness of various investments can be determined, in part, by comparing their historical rates of return to those of comparable assets.

Know more about rate of return with the help of the given link:

https://brainly.com/question/24232401

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