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You want to create a portfolio that generates an expected return of 13.5% and a beta of 1.1 by investing in two stocks (P and
You want to create a portfolio that generates an expected return of 13.5% and a beta of 1.1 by investing in two stocks (P and Q) and a risk-free asset with a sure rate of 4%. The beta of Stock P is 1.3, and its expected return is 16%. The beta of Stock Q is 0.9, and its expected return is 10.0%. What is the weight on Stock P in your portfolio? A. 48.29% B. 35.00% C. 51.71% D. 65.00%
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