Answered step by step
Verified Expert Solution
Question
1 Approved Answer
4. 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,
4. 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 20% and 80%, respectively. X has an expected rate of return of 16%, and Y has an expected rate return of 11%. To form should invest- A. $1143 B. $1000 C. -$200 of a complete portfolio with an expected rate of return of 12%, you in the risky portfolio P D. $875 5. 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 30% and 70% respectively. X has an expected rate of return of 20%, and Y has an expected rate of return of25%. To form a complete portfolio with an expected rate of return of 18%, you should invest approximately in the risky portfolio. This will mean you will also invest approximately security X and Y, respectively. A. 0%,30% 70% and of your complete portfolio in B. 35%; 1596; 5090 C. 70%; 2196; 49% D. 22%,28%; 60%
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started