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a . You have $ 1 0 0 , 0 0 0 to invest in a portfolio containing Stock x , Stock Y , and
a You have $ to invest in a portfolio containing Stock Stock and a riskfree asset. You must invest all of your money. Your goal is to create a portfolio that has an expected return of percent and that has only percent of the risk of the overall market. If has an expected return of percent and a beta of has an expected return of percent and a beta of and the riskfree rate is percent, how much money will you invest in Stock
b How do you explain your answer? Hint: Do the results indicate taking a short position in one of the Stocks?
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