1. 25.

Analysing a portfolio [LO 13.2, 13.4] You have $100 000 to invest in a portfolio containing Share X and Share Y. Your goal is to create a portfolio that has an expected return of 12.7 per cent. If Share X has an expected return of 11.4 per cent and a beta of 1.25, and Share Y has an expected return of 8.68 per cent and a beta of 0.85, how much money will you invest in Share Y? How do you interpret your answer? What is the beta of your portfolio?