Jack and Diane, grew up in the heartland, have now been married for 20 years and would like to invest some money. Assume the risk free rate is 2 % annually. They take a test that rates their individual risk preference. Jack is given a 5 and Diane a 2. Expected return Standard Deviation
6% 10%
8% 20%
12% 25%

Required:
a. Which investment can the couple agree on , that it is better than the risk free asset?
b. What is the optimal y (risky) for Jack?

Phoenix guitars is interested in pursuing backward integration to take greater ownership of the extraction of raw materials and production of components used in its signature line of guitars. although this approach would lower the overall cost of producing a guitar, the costs associated with producing electronic pickupsfor sound amplification are far greater than those associated with sourcing pickups from a reliable supplier. which of the following approaches is likely to produce superior results? a) invest in vertical integration despite the cost of producing pickups.b) abandon the idea of vertical integration entirely.c) pursue taper integration.d) introduce a budget line of guitars to diversify the firm's offerings.