Question
1) You are considering investing $1000 in a complete portfolio. The complete portfolio is composed of Treasury bills that pay 4% and a risky portfolio,
1) You are considering investing $1000 in a complete portfolio. The complete portfolio is composed of Treasury bills that pay 4% and a risky portfolio, P, constructed with two risky securities, X and Y. The optimal weights of X and Y in P are 38% and 62%, respectively. X has an expected rate of return of 30%, and Y has an expected rate of return of 60%.
a. The dollar values of your position in X would be _________, if you decide to hold a complete portfolio that has an expected return of 40%. Note: Express your answers in strictly numerical terms.
b. The dollar values of your position in Y would be _________, if you decide to hold a complete portfolio that has an expected return of 40%. Note: Express your answers in strictly numerical terms.
3. The dollar values of your position in the Tbill would be _________, if you decide to hold a complete portfolio that has an expected return of 40%. Note: Express your answers in strictly numerical terms.
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