Question
You currently have 50% of your wealth invested in risk-free assets and 50% of The financial securities below: Asset Expected return on Asset i beta
You currently have 50% of your wealth invested in risk-free assets and 50% of The financial securities below:
Asset | Expected return on Asset i | beta i | % invested in asset i |
i=1 | 7.6 | .2 | 10 |
i=2 | 12.4 | 0.8 | 10 |
i=3 | 15.6 | 1.3 | 10 |
i=4 | 18.8 | 1.6 | 20 |
In order to achieve a portfolio return of 12%, you want to reduce the percentage of Your investment in the risk-free asset in order to also invest in the portfolio of Market (the stock index). In this case, what percentage of your wealth do you Should invest in the market portfolio? What are the new proportions Investment in each of the financial securities? What is the new portfolio beta? F) If you decide to hold only the risk-free asset and the market portfolio, which are the proportions you will invest in the risk-free asset and the portfolio of the market?
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