You have $18,000 to invest in a stock portfolio. Your choices are Stock X with a

Question

You have $18,000 to invest in a stock portfolio. Your choices are Stock X with an expected return of 16 percent and Stock Y with an expected return of 11 percent. Assume your goal is to create a portfolio with an expected return of 12.10 percent.

How much money will you invest in Stock X and Stock Y? (Do not round intermediate calculations.Round your answers to 2 decimal places (e.g., 32.16).)

You have $18,000 to invest in a stock portfolio. Your choices are Stock X with an expected return of 16 percent and Stock Y with an expected return of 11 percent. Assume your goal is to create a portfolio with an expected return of 12.10 percent.

How much money will you invest in Stock X and Stock Y? (Do not round intermediate calculations.Round your answers to 2 decimal places (e.g., 32.16).)

Explanation / Answer

Let Investment in stock X be w, so investment in stock Y would be 1-w 16%*w + 11%(1-w) = 12.10% .16w + .11- .11w = .121 .05w = .011 w = 22% Investment in Stock X =22% *18,000 = 3,960 Investment in Stock Y = (1-22%)18,000 = 78% *18000 = 14,040

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