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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Question
Your client, Bo Regard, holds a complete portfolio that consists of a portfolio of risky assets (P) and T-Bills. The information below refers to these assets.
| E(Rp) | 12.00 | % | |||||
| Standard Deviation of P | 7.20 | % | |||||
| T-Bill rate | 3.60 | % | |||||
| Proportion of Complete Portfolio in P | 80 | % | |||||
| Proportion of Complete Portfolio in T-Bills | 20 | % | |||||
| Composition of P: | |||||||
| Stock A | 40.00 | % | |||||
| Stock B | 25.00 | % | |||||
| Stock C | 35.00 | % | |||||
| Total | 100.00 | % | |||||
What are the proportions of stocks A, B, and C, respectively, in Bo's complete portfolio?
A. 40%, 25%, 35%
B. 8%, 5%, 7%
C. 20%, 12.5%, 17.5%
D. 32%, 20%, 28%
E. 16%, 10%, 14%
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