Assume that you manage a risky portfolio with an expected rate of return of 17% and a standard deviation of 33%. The T-bill rate is Your risky portfolio includes the following investments in the given proportions: Stock A Stock B Stock C 30% 35 35 Your client decides to invest in your risky portfolio a proportion (y) of his total investment budget with the remainder in a T-bill mo market fund so that his overall portfolio will have an expected rate of return of 16%. Required: a. What is the proportion y? (Round your answer to 1 decimal place.) Proportion y % b. What are your client's investment proportions in your three stocks and in T-bills? (Round your intermediate calculations and fi answers to 2 decimal places.) Security Investment Proportions T-Bills % Stock A % Stock B % Stock C %
Assume that you manage a risky portfolio with an expected rate of return of 17% and a standard deviation of 33%. The T-bill rate is Your risky portfolio includes the following investments in the given proportions: Stock A Stock B Stock C 30% 35 35 Your client decides to invest in your risky portfolio a proportion (y) of his total investment budget with the remainder in a T-bill mo market fund so that his overall portfolio will have an expected rate of return of 16%. Required: a. What is the proportion y? (Round your answer to 1 decimal place.) Proportion y % b. What are your client's investment proportions in your three stocks and in T-bills? (Round your intermediate calculations and fi answers to 2 decimal places.) Security Investment Proportions T-Bills % Stock A % Stock B % Stock C %
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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Transcribed Image Text:Assume that you manage a risky portfolio with an expected rate of return of 17% and a standard deviation of 33%. The T-bill rate is 7%.
Your risky portfolio includes the following investments in the given proportions:
Stock A
Stock B
Stock C
30%
35
35
Your client decides to invest in your risky portfolio a proportion (y) of his total investment budget with the remainder in a T-bill money
market fund so that his overall portfolio will have an expected rate of return of 16%.
Required:
a. What is the proportion y? (Round your answer to 1 decimal place.)
Proportion y
%
b. What are your client's investment proportions in your three stocks and in T-bills? (Round your intermediate calculations and final
answers to 2 decimal places.)
Security
Investment
Proportions
T-Bills
%
Stock A
%
Stock B
%
Stock C
%
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