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Suppose that in the entire economy there are only four assets: three risky assets, stock A, B and C, and a risk-free bond. The total
Suppose that in the entire economy there are only four assets: three risky assets, stock A, B and C, and a risk-free bond. The total market values of these assets are, respectively, $24 billion, $36 billion, $24 billion and $16 billion. An investor with a budget of $100,000 decides to invest $30,000 in the risk-free bond. What would be the optimal allocation of the remaining $70,000 among the three stocks?
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