Question
You are considering investing $1,000 in a complete portfolio. The complete portfolio is composed of Treasury bills that pay 3% and a risky portfolio, P,
You are considering investing $1,000 in a complete portfolio. The complete portfolio is composed of Treasury bills that pay 3% and a risky portfolio, P, constructed with two risky securities, X and Y. The optimal weights of X and Y in P are 45% and 55% respectively. X has an expected rate of return of 13%, and Y has an expected rate of return of 7%. To form a complete portfolio with an expected rate of return of 10%, you should invest approximately ________ in the risky portfolio. This will mean you will also invest approximately ________ and ________ of your complete portfolio in security X and Y, respectively.
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