here is what to do for the term project:1. read the article of Lintner (1965)

2. define the discussed research problem.This chapter discusses the problem of selecting optimal security portfolios by risk-averse investors who have the alternative of investing in risk-free securities with a positive return or borrowing at the same rate of interest and who can sell short if they wish. It presents alternative and more transparent proofs under these more general market conditions for Tobin’s important separation theorem that “ …the proportionate composition of the non-cash assets is independent of their aggregate share of the investment balance … and for risk avertere in purely competitive markets when utility functions are quadratic or rates of return are multivariate normal. The chapter focuses on the set of risk assets held in risk averters’ portfolios. It discusses various significant equilibrium properties within the risk asset portfolio. The chapter considers a few implications of the results for the normative aspects of the capital budgeting decisions of a company whose stock is traded in the market. It explores the complications introduced by institutional limits on amounts that either individuals or corporations may borrow at given rates, by rising costs of borrowed funds, and certain other real world complications.The effects of risk and uncertainty upon asset prices, upon

3. what are the objectives and motivations of the articles?

4. the author discusses a very particular model, define this model5. elaborate the discussed model and give its hypotheses using the help of the internetThere seems to be a general presumption among economists that relative risks are best measured by the standard deviation (or coefficient of variation) of the rate of return, but in the simplest cases considered – specifically when all covariances are considered to be invariant (or zero) – the indifference functions are shown to be linear between expected rates of return and their variance, not standard deviation.4 (With variances fixed, the indifference function betweenthe ith expected rate of return and its pooled covariance with other stocks is hyperbolic.) There is no simple relation between the expected rate of return required to maintain an investor’srelative holding of a stock and its standard deviation.Specifically, when covariances are nonzero and variable, the indifference functions are complex and non-linear even if it is assumed that the correlations between rates of return on differ-ent securities are invariant.

here is what to do for the term project:1. read the article of Lintner (1965)

2. define the discussed research problem.This chapter discusses the problem of selecting optimal security portfolios by risk-averse investors who have the alternative of investing in risk-free securities with a positive return or borrowing at the same rate of interest and who can sell short if they wish. It presents alternative and more transparent proofs under these more general market conditions for Tobin’s important separation theorem that “ …the proportionate composition of the non-cash assets is independent of their aggregate share of the investment balance … and for risk avertere in purely competitive markets when utility functions are quadratic or rates of return are multivariate normal. The chapter focuses on the set of risk assets held in risk averters’ portfolios. It discusses various significant equilibrium properties within the risk asset portfolio. The chapter considers a few implications of the results for the normative aspects of the capital budgeting decisions of a company whose stock is traded in the market. It explores the complications introduced by institutional limits on amounts that either individuals or corporations may borrow at given rates, by rising costs of borrowed funds, and certain other real world complications.The effects of risk and uncertainty upon asset prices, upon

3. what are the objectives and motivations of the articles?

4. the author discusses a very particular model, define this model5. elaborate the discussed model and give its hypotheses using the help of the internetThere seems to be a general presumption among economists that relative risks are best measured by the standard deviation (or coefficient of variation) of the rate of return, but in the simplest cases considered – specifically when all covariances are considered to be invariant (or zero) – the indifference functions are shown to be linear between expected rates of return and their variance, not standard deviation.4 (With variances fixed, the indifference function betweenthe ith expected rate of return and its pooled covariance with other stocks is hyperbolic.) There is no simple relation between the expected rate of return required to maintain an investor’srelative holding of a stock and its standard deviation.Specifically, when covariances are nonzero and variable, the indifference functions are complex and non-linear even if it is assumed that the correlations between rates of return on differ-ent securities are invariant.

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