Define the Treynor-Black method for portfolio construction.

Consider the following monthly returns for a stock, the market portfolio, and the risk-free investment over the last 12 months: Monthly Returns of a Stock, the Market Portfolio, and the Risk-Free Investment Month Stock Market Risk-Free 1 % % % 2 % % % 3 % % % 4 % % % 5 % % % 6 % % % 7 % % % 8 % % % 9 % % % 10 % % % 11 % % % 12 % % %   Assuming the single-factor model is true, what was the annualized firm-specific risk over the last twelve months for the stock? Enter your annualized firm-specific risk as a percentage, rounded to the nearest 0.01% (e.g., for 0.12345, enter 12.35).

In the context of the single-factor model, which of the following is a cyclical stock?

Suppose the simple CAPM is correct and investors have quadratic utility. What is the market risk premium if the risk-aversion index of the average investor is 3.0 and the market portfolio risk (standard deviation) is 20%?

Using the Treynor-Black model, you identified an optimal active portfolio that has an alpha, beta, and firm-specific risk of %, , and %, respectively. At this time, the market risk premium is % and the market portfolio risk (standard deviation) is %. What is the Sharpe ratio of the optimal risky portfolio? Enter your answer as a number, rounded to the nearest 0.001.

The slope of the budget constraint represents the ___ while the slope of the indifference curve represents the ___:

Compared to free trade, the change of Econland total surplus (including producer plus consumer plus government revenue) due to the tariff in question 13 equals

What is the Nash equilibrium?

Use Alya’s indifference curves above to answer the following questions. Suppose that Alya only consumes pizza and coke. and furthermore spends all of her income on on these goods. Her current income level is $40, the price per slice of pizza is $4 and the price of a can of coke is $2. The graph below shows some of Alya’s indifference curves as well as some budget constraints. It is your job to identify which budget constraint(s) you have to use in each question. Use this information to answer the following questions.

If Carmel and Haggith do trade with each other,