question 10

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State Probability Good Normal Bad 0.3 0.4 0.3 Return on Asset X 2% 2% page Return on Asset Y 7.5% (B) (C) (D) 10. (B) (C) Suppose your port!olio consists only of X and Y. If you want the expected re- turn of your portfolio to be 5%, how much should you invest in each asset? 10% in asset X and 90% in asset Y 25% in asset X and 75% in asset Y 40% in asset X and 60% in asset Y 75% in asset X and 25% in asset Y Suppose the return on the market portfolio is' 4%. What is the beta of Asset Y? 0.5 1 1.5 2