On Commodity Exchange a It Is Possible to Buy and Sell

question 13

Multiple Choice

On Commodity Exchange A it is possible to buy and sell crude oil at $117 per barrel,while on Commodity Exchange B crude oil can be bought and sold at $118 per barrel.If there are transaction costs of 1% when buying or selling on either exchange,what is the net effect of buying a barrel of oil on Exchange A and selling it on Exchange B?

• A)-$1.35
• B)-$0.17
• C)$0.99
• D)$1.01
• E)$1.00

Understand and calculate standard deviations, covariances, and correlation coefficients for investment returns.

Comprehend the principles of designing risky portfolios, including the calculation of expected returns and optimal risky portfolio proportion.

Grasp the concepts of complete portfolio and the capital market line.

Understand and apply Tobin's separation property in portfolio selection.

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