Suppose you are creating a portfolio consisting of the risk-free asset and a stock with beta-1. You want your portfolio to have a beta of 0.7. What percent of your money should you invest in the stock to achieve a portfolio beta of 0.7? (Hint: You should be able to use your understanding of beta combined with a formula we covered in class to calculate the weight of the stock in the portfolio). ○ 10% ○ 100% 50% ○ 70%
Suppose you are creating a portfolio consisting of the risk-free asset and a stock with beta-1. You want your portfolio to have a beta of 0.7. What percent of your money should you invest in the stock to achieve a portfolio beta of 0.7? (Hint: You should be able to use your understanding of beta combined with a formula we covered in class to calculate the weight of the stock in the portfolio). ○ 10% ○ 100% 50% ○ 70%
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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answer must be correct or i will give down vote
Transcribed Image Text:Suppose you are creating a portfolio consisting of the risk-free asset and a stock with beta-1. You want your portfolio to have a beta of 0.7. What percent of your money
should you invest in the stock to achieve a portfolio beta of 0.7?
(Hint: You should be able to use your understanding of beta combined with a formula we covered in class to calculate the weight of the stock in the portfolio).
○ 10%
○ 100%
50%
○ 70%
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