FIN 571 TUTOR Extraordinary Life/fin571tutor.com FIN 571 TUTOR Extraordinary Life/fin571tutor.com | Page 43
In order to receive proper credit, please reply to this message when posting your answers to WK2 DQ1.
� Suppose you own $ 1 million worth of 30-year Treasury bonds. Is this asset riskless?
� 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?
Can you think of an asset that is truly riskless?
========================================================= FIN 571 Week 2 DQ 2
Suppose rf is 5 % and rM is 10 %. According to the SML and the CAPM, an asset with a beta of −2.0
has a required return of negative 5 % [= 5 − 2( 10 − 5)]. Can this be possible? Does this mean that
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In order to receive proper credit, please reply to this message when posting your answers to WK2 DQ1.
� Suppose you own $ 1 million worth of 30-year Treasury bonds. Is this asset riskless?
� 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?
Can you think of an asset that is truly riskless?
========================================================= FIN 571 Week 2 DQ 2
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Suppose rf is 5 % and rM is 10 %. According to the SML and the CAPM, an asset with a beta of −2.0
has a required return of negative 5 % [= 5 − 2( 10 − 5)]. Can this be possible? Does this mean that