Question
A stock analyst has come to the conclusion that three stocks have the following characteristics: Stock Expected Return Beta X 3% 0.20 Y 4% 0.50
A stock analyst has come to the conclusion that three stocks have the following characteristics:
Stock Expected Return Beta
X 3% 0.20
Y 4% 0.50
Z 9% 1.20
16. Given this information, the analyst should recommend:
(A) buying a portfolio that has a 45% weight on X, and 55% on Y, while selling (short)
the same dollar amount of Z.
(B) selling (short) a portfolio that has a 45% weight on X, and 55% on Y, while buying
the same dollar amount of Z.
(C) buying a portfolio that has a 70% weight on X and 30% on Z, while selling (short)
the same dollar amount of Y.
(D) selling (short) a portfolio that has a 70% weight on X and 30% on Z, while buying
the same dollar amount of Y.
i want to know the solution
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