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Please provide the work and explanations so that I can understand the problem. Your friend wants to invest in a portfolio that includes two stocks
Please provide the work and explanations so that I can understand the problem.
Your friend wants to invest in a portfolio that includes two stocks and the risk free investment. Stock G has a beta of 2.5 and an expected return of 10%, Stock E has a beta of 0.5 and an expected return of 5% and the risk free rate is 2%. Your friend comes to you asking for help in creating a portfolio with an expected return of 9% and a market risk of 1.5. If your friend has $20,000 to invest how much of it should she put in Stock G?
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