You have $19,000 to invest in a stock portfolio. Your choices are Stock X with a

Question

You have $19,000 to invest in a stock portfolio. Your choices are Stock X with an expected return of 12 percent and Stock Y with an expected return of 11.5 percent. If your goal is to create a portfolio with an expected return of 11.8 percent, how much money will you invest in Stock X and Stock Y? (Do not round intermediate calculations. Round your answer to the nearest dollar, e.g., 32.)

You have $19,000 to invest in a stock portfolio. Your choices are Stock X with an expected return of 12 percent and Stock Y with an expected return of 11.5 percent. If your goal is to create a portfolio with an expected return of 11.8 percent, how much money will you invest in Stock X and Stock Y? (Do not round intermediate calculations. Round your answer to the nearest dollar, e.g., 32.)

Explanation / Answer

Wx+Wy = 1

Wx×Rx+Wy+Ry = 11.8%

(1-Wy)×12%+Wy×11.5% = 11.8%

Wy = 40%

Wx = 60%

Amount invested in stock X = $11,400

Amount invested in stock Y = $7,600

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