Question
Assume that you manage a risky portfolio with an expected rate of return of 12% and a standard deviation of 44%. The T-bill rate is
Assume that you manage a risky portfolio with an expected rate of return of 12% and a standard deviation of 44%.
The T-bill rate is 5%. Your client chooses to invest 80% of a portfolio in your fund and 20% in a T-bill money market fund.
| Suppose your risky portfolio includes the following investments in the given proportions: |
| Stock A | 28% |
| Stock B | 37% |
| Stock C | 35% |
| What are the investment proportions of your clients overall portfolio, including the position in T-bills, in Stock A? (Enter your answer as a decimal number rounded to four decimal places.) |
| Security | Investment Proportions |
| Stock A | ? |
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Fundamentals of Corporate Finance
Authors: Richard Brealey, Stewart Myers, Alan Marcus
8th edition
77861620, 978-0077861629
