Question
You consider investing $100 in a portfolio consisting of a stock and the risk-free rate for one-period. The stock has an expected return of 12%
You consider investing $100 in a portfolio consisting of a stock and the risk-free rate for one-period. The stock has an expected return of 12% and a standard deviation of 15% and the risk-free rate is 5%. If you want your portfolio to have an expected value after one-period of $115, it should be formed by (round to the nearest dollar):-
-investing $43 in the stock and $57 in the risk-free asset
-borrowing $43 at the risk-free rate and investing the total amount in the stock-
-None of the available answer choices
-investing $100 in the stock
-investing $80 in the stock and $20 in the risk-free asset
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