Question
1.a) You want to create a portfolio equally as risky as the market, and you have $500,000 to invest. Information about the possible investments is
1.a) You want to create a portfolio equally as risky as the market, and you have $500,000 to invest. Information about the possible investments is given below:
| Asset | Investment | Beta |
|---|---|---|
| Stock A | $133,310 | 0.8 |
| Stock B | $141,185 | 1.36 |
| Stock C | -- | 1.48 |
| Risk-free asset | -- | -- |
How much must you invest in Stock C?
1.b) Your portfolio has a beta of 0.9. The portfolio consists of 15 percent U.S. Treasury bills, 30 percent stock A, and 55 percent stock B. Stock A has a risk level equivalent to that of the overall market. What is the beta of stock B?
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Capital As Power
Authors: Jonathan Nitzan, Shimshon Bichler
1st Edition
0415496802, 978-0415496803
