Question
Use the following information for the next three questions: You have $20,000 available to invest in the market portfolio, which has an expected return of
Use the following information for the next three questions: You have $20,000 available to invest in the market portfolio, which has an expected return of 9% and the risk-free asset, which returns 3%: 18. How would you use your available funds to invest in the market portfolio and the risk-free asset to achieve a beta of 0.9? How much money would you invest in the market? A) $18,000 B) $2,000 C) $4,300 D) $2,180 19. What is the expected return of the portfolio constructed in part a? A) 8.4% B) 6.0% C) 9.0% D) 8.2% 20. If the volatility of the market portfolio is 35%, what is the volatility of the portfolio constructed in part a.? A) 9.9% B) 9.0% C) 28.9% D) 31.5%
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