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You have $100,000 to invest in a portfolio containing Stock X, Stock Y and a risk-free asset. You must invest all of your money. Your
You have $100,000 to invest in a portfolio containing Stock X, Stock Y and a risk-free asset. You must invest all of your money. Your goal is to create a portfolio that has ana expected return of 13 percent and that has only 70 percent of the risk of the overall market. If X has an expected return of 31 percent and a beta of 1.8. Y has an expected return of 20 percent and a beta of 1.3 and the risk-free rate is a 7 percent, how much money will you invest in stock Y? How do you interpret your answer?
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