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You own equity in a stock whose asset beta is 0.50 and whose assets are partially funded with risk-free debt. The market value of the
You own equity in a stock whose asset beta is 0.50 and whose assets are partially funded with risk-free debt. The market value of the Equity is $15,000,000 and the market value of the Debt is $10,000,000. If the equity beta for this stock is identical to the beta of a portfolio of your friend who invests x% of his wealth in Treasury Bills and the rest in the market portfolio, what fraction of your friend's wealth is invested in the market?
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