Julia has $5,000.00 to invest in a portfolio. She will build the portfolio from three assets: Stock A with an expected return of 16.0% and a standard deviation of 42% Stock B with an expected return of 12.0% and a standard deviation of 32% T-Bills with an expected return of 4.00% and a standard deviation of 0%. Assume that she can short sell T-bills, the risk-free asset (or borrow at the risk-free rate). Assume also that she will invest the same amount in Stock A and Stock B. How much money will she invest in Stock A if her goal is to create a portfolio with an expected return of 20.00%. $ (to nearest $0.01)
Julia has $5,000.00 to invest in a portfolio. She will build the portfolio from three assets: Stock A with an expected return of 16.0% and a standard deviation of 42% Stock B with an expected return of 12.0% and a standard deviation of 32% T-Bills with an expected return of 4.00% and a standard deviation of 0%. Assume that she can short sell T-bills, the risk-free asset (or borrow at the risk-free rate). Assume also that she will invest the same amount in Stock A and Stock B. How much money will she invest in Stock A if her goal is to create a portfolio with an expected return of 20.00%. $ (to nearest $0.01)
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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Ch 13] Julia has $5,000.00 to invest in a portfolio. She will build the portfolio from three
assets:
Stock A with an expected return of 16.0% and a standard deviation of 42%
Stock B with an expected return of 12.0% and a standard deviation of 32%
T-Bills with an expected return of 4.00% and a standard deviation of 0%.
Assume that she can short sell T-bills, the risk-free asset (or borrow at the risk-free rate).
Assume also that she will invest the same amount in Stock A and Stock B. How much
money will she invest in Stock A if her goal is to create a portfolio with an expected return
of 20.00%.
$
(to nearest $0.01)
assets:
Stock A with an expected return of 16.0% and a standard deviation of 42%
Stock B with an expected return of 12.0% and a standard deviation of 32%
T-Bills with an expected return of 4.00% and a standard deviation of 0%.
Assume that she can short sell T-bills, the risk-free asset (or borrow at the risk-free rate).
Assume also that she will invest the same amount in Stock A and Stock B. How much
money will she invest in Stock A if her goal is to create a portfolio with an expected return
of 20.00%.
$
(to nearest $0.01)
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