Changing risk

level.

Mr. Malone wants to change the overall risk of his portfolio. Currently, his portfolio is a combination of risky assets with a beta of

1.25

and an expected return of

14%.

He will add a risk-free asset (U.S. Treasury bill) to his portfolio. If he wants a beta of

1.00,

what percentage of his wealth should be in the risky portfolio and what percentage should be in the risk-free asset? If he wants a beta of

0.75?

If he wants a beta of

0.50?

If he wants a beta of

0.25?

Is there a pattern here?

If he wants a beta of

1.00,

then he should have

nothing%

of his wealth in the risky portfolio and

nothing%

in the risk-free asset.(Round both answers to two decimal places.)