Question
You invest $1,000 in a complete portfolio. The complete portfolio is composed of a risky asset with an expected rate of return of 16% and
You invest $1,000 in a complete portfolio. The complete portfolio is composed of a risky asset with an expected rate of return of 16% and a standard deviation of 20% and a Treasury bill with a rate of return of 6%. A portfolio that has an expected value in 1 year of $1,100 could be formed if you _________.
A) place 60% of your money in the risky portfolio and the rest in the risk-free asset
B) place 75% of your money in the risky portfolio and the rest in the risk-free asset
C) place 55% of your money in the risky portfolio and the rest in the risk-free asset
D) place 40% of your money in the risky portfolio and the rest in the risk-free asset
Please give a well explain.
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