An investor can design a risky portfolio based on two stocks, X and Y. Stock X has an expected return of 13% and a standard deviation of return of 15%. Stock Y has an expected return of 16% and a standard deviation of return of 19%. The correlation coefficient between the returns of X and Y is 0.15. The risk-free rate of return is 3%. How much does the investor need to invest in each stock to create the optimal portfolio? O Wx-40% and Wy=60% Wx-45% and Wy=55% Wx-50% and Wy=50% Wx-55% and Wy=45% O Wx-60% and Wy=40%

An investor can design a risky portfolio based on two stocks, X and Y. Stock X has an expected return of 13% and a standard deviation of return of 15%. Stock Y has an expected return of 16% and a standard deviation of return of 19%. The correlation coefficient between the returns of X and Y is 0.15. The risk-free rate of return is 3%. How much does the investor need to invest in each stock to create the optimal portfolio? O Wx-40% and Wy=60% Wx-45% and Wy=55% Wx-50% and Wy=50% Wx-55% and Wy=45% O Wx-60% and Wy=40%

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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