Question
WSM has a beta of 0.70. A) What is the beta of the risk free asset? B) What is the beta of the market portfolio?
WSM has a beta of 0.70.
A) What is the beta of the risk free asset?
B) What is the beta of the market portfolio?
C) What is the beta of a portfolio which invests $200 in WSM and $100 in the risk free asset?
D) What is the beta of an asset which invests $200 in WSM and goes short $100 in the risk free asset?
E) Investors frequently want to create portfolios which have no exposure to market risk (a portfolio whose value won't change if the market moves). They want to create a portfolio which has a beta of 0. If I want to create a 0 beta portfolio by investing in 2 assets, WSM and the market, and I want ti invest $500 in WSM, how much should I invest in (or go short) the market?
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