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You want to invest $41,000 in a portfolio with a beta of no more than 1.36 and an expected return of 13.1%. Bay Corp. has a beta of 1.11 and an expected return of 11.2%, and City Inc. has a beta of 1.74 and an expected return of 15.86%. The risk-free rate is 3%. You can invest in Bay Corp. and City Inc. How much will you invest in each? In Bay Corp., you should invest $ In City Inc., you should invest $ (Round to the nearest cent.) (Round to the nearest cent.)

You want to invest $41,000 in a portfolio with a beta of no more than 1.36 and an expected return of 13.1%. Bay Corp. has a beta of 1.11 and an expected return of 11.2%, and City Inc. has a beta of 1.74 and an expected return of 15.86%. The risk-free rate is 3%. You can invest in Bay Corp. and City Inc. How much will you invest in each? In Bay Corp., you should invest $ In City Inc., you should invest $ (Round to the nearest cent.) (Round to the nearest cent.)

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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You want to invest $41,000 in a portfolio with a beta of no more than 1.36 and an expected return of 13.1%. Bay Corp. has a beta of 1.11 and an expected return of 11.2%, and City Inc. has a beta of 1.74 and an expected return of 15.86%. The risk-free rate is 3%. You can invest in Bay Corp. and City Inc. How much will you invest in each? In Bay Corp., you should invest $ In City Inc., you should invest $ (Round to the nearest cent.) (Round to the nearest cent.)
Transcribed Image Text:You want to invest $41,000 in a portfolio with a beta of no more than 1.36 and an expected return of 13.1%. Bay Corp. has a beta of 1.11 and an expected return of 11.2%, and City Inc. has a beta of 1.74 and an expected return of 15.86%. The risk-free rate is 3%. You can invest in Bay Corp. and City Inc. How much will you invest in each? In Bay Corp., you should invest $ In City Inc., you should invest $ (Round to the nearest cent.) (Round to the nearest cent.)
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