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 FOR MORE CLASSES VISIT www . fin571tutor . com
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
the asset has negative risk ? Why would anyone ever invest in an asset that has an expected and
required return that is negative ? Explain
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 FOR MORE CLASSES VISIT www . fin571tutor . com
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
the asset has negative risk ? Why would anyone ever invest in an asset that has an expected and
required return that is negative ? Explain
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