Question

After accounting for the risk free asset, what is the ratio of risky assets across all investors?

Option 1: 0.5
Option 2: 1.0
Option 3: 1.5
Option 4: 2.0

Answer 1

The ratio of risky assets across all investors after accounting for the risk-free asset is 0.5.

Step-by-step explanation:

The ratio of risky assets across all investors after accounting for the risk-free asset can vary depending on the preferences and risk tolerance of investors. However, in general, investors tend to allocate a higher proportion of their portfolio to risky assets to potentially earn higher returns.

For example, if we assume that investors allocate half of their portfolio to risky assets and the other half to the risk-free asset, the ratio of risky assets across all investors would be 0.5.

Therefore, Option 1: 0.5 is the correct answer.