Question
You have $122,000 to invest in a portfolio containing Stock X, Stock Y, and a risk-free asset. You must invest all of your money. A
You have $122,000 to invest in a portfolio containing Stock X, Stock Y, and a risk-free asset. You must invest all of your money. A portfolio that has an expected return of 14 percent and that has only 72 percent of the risk of the overall market. If X has an expected return of 41 percent and a beta of 1.8, Y has an expected return of 21 percent and a beta of 1.4, and the risk-free rate is 7 percent, how much money will you invest in Stock Y?
A stock with which one of the following betas has an expected return that most resembles the overall market expected rate of return?
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