You have $100,000 to invest in a portfolio containing Stock X, Stock Y, and a risk free asset You must invest all of your money Your goal is to create a portfolio that has an expected return of 13 percent and that has only 70 percent of the risk of the overall market If X has an expected return of ...

E R p 13 w X 31 w Y 20 1 w X w Y 07 b p 7 w X ...

You have $100,000 to invest in a portfolio containing Stock X, Stock Y, and a risk-free asset.

Question:

You have $100,000 to invest in a containing Stock X, Stock Y, and a risk-free asset. You must invest all of your money. Your goal is to create a that has an of 13 percent and that has only 70 percent of the risk of the overall market. If X has an of 31 percent and a beta of 1.8, Y has an of 20 percent and a beta of 1.3, and the risk-free rate is 7 percent, how much money will you invest in Stock Y? How do you interpret your answer?

Expected Return
The expected return is the profit or loss an investor anticipates on an investment that has known or anticipated rates of return (RoR). It is calculated by multiplying potential outcomes by the chances of them occurring and then totaling these... Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...