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You want to create a portfolio equally as risky as the market, and you have $1,200,000 to invest. You've already allocated a portion of your
You want to create a portfolio equally as risky as the market, and you have $1,200,000 to invest. You've already allocated a portion of your wealth to Stock A and Stock B, and you've decided to also invest money in Stock C and the risk-free asset. Consider the following information: |
Asset | Investment | Beta |
Stock A | $360,000 | 0.90 |
Stock B | $240,000 | 1.30 |
Stock C | ? | 1.50 |
Risk-free asset | ? | ? |
Required: |
(a) | How much should you invest in Stock C? (Do not round your intermediate calculations.) |
(Click to select) $391,040 $357,200 $226,667 $376,000 $360,960 |
(b) | How much should you invest in the risk-free asset? (Do not round your intermediate calculations.) |
(Click to select) $212,800 $232,960 $215,040 $224,000 $373,333 |
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