You want to invest $50,000 in a portfolio with a beta of no more than 1 4 and an expected return of 12 4 Bay Corp has a beta of 1 2 and an expected return of 11 2 , and City Inc has a beta of 1 8 and an expected return of 14 8 The risk free rate is 4 You can invest in Bay Corp and City Inc How much...

Plan First solve for the market risk premium You know the expected return for Bay Corp the riskfre ...

You want to invest $50,000 in a portfolio with a beta of no more than 1.4 and

Question:

You want to invest $50,000 in a with a beta of no more than 1.4 and an of 12.4%. Bay Corp. has a beta of 1.2 and an of 11.2%, and City Inc. has a beta of 1.8 and an of 14.8%. The risk-free rate is 4%. You can invest in Bay Corp. and City Inc. How much will you invest in each?

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...