You are considering investing $1,000 in a complete portfolio. The complete portfolio is composed of Treasury bills that pay 5% and a risky portfolio, P, constructed with two risky securities, X and Y. The optimal weights of X and Y in P are 35% and 65% respectively. X has an expected rate of return of 14%, and Y has an expected rate of return of 10%. To form a complete portfolio with an expected rate of return of 14%, you should invest approximately in the risky portfolio. This will mean you will of your complete 6 also invest approximately and portfolio in security X and Y, respectively.
You are considering investing $1,000 in a complete portfolio. The complete portfolio is composed of Treasury bills that pay 5% and a risky portfolio, P, constructed with two risky securities, X and Y. The optimal weights of X and Y in P are 35% and 65% respectively. X has an expected rate of return of 14%, and Y has an expected rate of return of 10%. To form a complete portfolio with an expected rate of return of 14%, you should invest approximately in the risky portfolio. This will mean you will of your complete 6 also invest approximately and portfolio in security X and Y, respectively.
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:QUESTION 13
You are considering investing $1,000 in a complete portfolio. The complete
portfolio is composed of Treasury bills that pay 5% and a risky portfolio, P,
constructed with two risky securities, X and Y. The optimal weights of X and
Y in P are 35% and 65% respectively. X has an expected rate of return of
14%, and Y has an expected rate of return of 10%. To form a complete
portfolio with an expected rate of return of 14%, you should invest
approximately
in the risky portfolio. This will mean you will
and
of your complete
also invest approximately
portfolio in security X and Y, respectively.
25%; 45%; 30%
140%; 49%; 91%
78%; 27%; 51%
50%; 25%; 25%
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