The current risk-free rate is 6 percent and the market risk premium is

5 percent. Erika is preparing to invest $30,000 in the market and she wants her portfolio to have an expected return of 12.5 percent. Erika is concerned about bearing too much stand-alone risk; therefore, she will diversify her portfolio by investing in three different assets (two mutual funds and a risk-free security).The three assets she will be investing in are an aggressive growth mutual fund that has a beta of 1.6, an S&P 500 index fund with a beta of 1, and a risk-free security that has a beta of 0. She has already decided that she will invest 10 percent of her money in the risk-free asset. In order to achieve the desired expected return of 12.5 percent, what proportion of Erika's portfolio must be invested in the S&P 500 index fund?

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The current riskfree rate is 6 percent and the market risk premium is 5 percent. Erika is preparing to invest $30,000 in the market and she wants her portfolio to have an expected return of 12.5 percent. Erika is concerned about bearing too much stand-alone risk; thereliore= she will diversify her portfolio by investing in three dierent assets (two mutual funds and a riskfree security). The three assets she will be investing in are an aggressive growth mutual fund that has a beta of 1.6, an S&P 500 index Jnd with a beta of l= and a riskfree security that has a beta of 0. She has alreadyI decided that she will invest 10 percent ofher money' in the riskfree asset. In order to achieve the desired expected return of 12.5 percent, what proportion of Erika's portfolio must be invested in the S&P 500 index fund? 0 33.33% 0 23.33% 0 53.33% 0 ?6.66% O 66.66%