Answer Part A

You want to create a portfolio equally as risky as the market, and you have $1,100,000 to invest. You want to keep your investment in Stock A and Stock B constant. Part A: What is the beta on the risk-free asset? Part B. Set-up the equation for the portfolio's beta and calculate the portfolio weight on Stock C that will give you the target beta. Use this to calculate the dollar amount you must invest in Stock C. Part C. Based on your answer to Part B, how much money should be invested in the risk- free asset? (Do not include the dollar signs ($). Leave no cells blank. Round your answers to the nearest whole dollar amount. (e.g., 32)) Asset Stock A Stock B Beta 0.9 Investment $220,000 220,000 $ 373230 1.3 Stock C 1.65 Risk-free asset $ 286770