You have $100,000 to invest in either Stock D, Stock F, or a risk-free asset. Yo

Question

You have $100,000 to invest in either Stock D, Stock F, or a risk-free asset. You must invest all of your money. Your goal is to create a portfolio that has an expected return of 12 percent. Assume D has an expected return of 15.5 percent, F has an expected return of 11.4 percent, and the risk-free rate is 6.25 percent.

If you invest $50,000 in Stock D, how much will you invest in Stock F?

You have $100,000 to invest in either Stock D, Stock F, or a risk-free asset. You must invest all of your money. Your goal is to create a portfolio that has an expected return of 12 percent. Assume D has an expected return of 15.5 percent, F has an expected return of 11.4 percent, and the risk-free rate is 6.25 percent.

Explanation / Answer

Answer is $ 21,844.66  invest in Stock F

Workings

Let X =weight of portfolio F

X =1.1250%/5.15% =21.845%

Materials price variance Return Weight Amount Invested D 15.50% 50%                           50,000.00 7.75% F 11.40% 21.845%                           21,844.66 2.49% R 6.25% 28.16%                           28,155.34 1.76% Porfolio Return 12.00%

Related Questions

Navigate

• Browse (All)
• Browse Y
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.