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You want to create a portfolio equally as risky as the market, and you have $100,000 to invest. In your portfolio, you want to invest

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  1. You want to create a portfolio equally as risky as the market, and you have $100,000 to invest. In your portfolio, you want to invest in Stock A, Stock B, Stock C, and a risk-free asset. You want to invest $20,000 in Stock A and $40,000 in Stock B. The beta of Stock A is 1.2, the beta of Stock B is 0.8, and the beta of Stock C is 1.5.
  1. What is the market beta? What is the beta of the risk-free asset?
  2. How much should you invest in Stock C and the risk-free asset to create this portfolio?
4. [14 Points] You want to create a portfolio equally as risky as the market, and you have $100,000 to invest. In your portfolio, you want to invest in Stock A, Stock B, Stock C, and a risk-free asset. You want to invest $20,000 in Stock A and $40,000 in Stock B. The beta of Stock A is 1.2, the beta of Stock B is 0.8, and the beta of Stock C is 1.5. 1) What is the market beta? What is the beta of the risk-free asset? 2) How much should you invest in Stock C and the risk-free asset to create this portfolio

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