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7. Farah wants to construct a complete portfolio of $15,000. The complete portfolio is composed of Treasury bills that pay 5% and a risky portfolio,
7. Farah wants to construct a complete portfolio of $15,000. The complete portfolio is composed of Treasury bills that pay 5% and a risky portfolio, P, constructed with two risky securities, A and B. The optimal weights of A and B in P are 60% and 40% respectively. A has an expected rate of return of 14%, and B has an expected rate of return of 10%. To form a complete portfolio with an expected rate of return of 8%, you should invest approximately in the risky portfolio. This will mean you will also invest approximately 24% and of your complete portfolio in security A and B, respectively. * O A) 50%; 20% B) 0%; 40% 25%; 30% O D) 40%; 16% O E) None of the above
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