(Answered) You are currently only invested in the Natasha Fund (aside f

#39;You are currently only invested in the Natasha Fund (aside from risk-free securities).It has an expected return of 14% with a volatility of 20%. Currently, the risk-free rate of interest is 3.8%. Your broker suggests that you add Hannah Corporation to your portfolio. Hannah Corporation has an expected return of 20%, a volatility of 60%, and a correlation of 0 with the Natasha Fund.;a) Is your broker right?;b) You follow your broker's advice and make a substantial investment in Hannah stock so that, considering only your risky investment, 60% is in the Natasha Fund and 40% is in Hannah stock. When you tell your finance professor about your investment, he says that you made a mistake and should reduce your investment in Hannah. Is your finance professor right?;c) You decide to follow your finance professor's advice, and reduce your exposure to Hannah. Now Hannah represents 15% of your risky portfolio, with the rest in the Natasha Fund. Is this the correct amount of Hannah stock to hold?;Attachments;stock final draft.docx
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You are currently only invested in the Natasha Fund (aside f

 


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