Julie wants to create a $5,000portfolio. She also wants to invest as much as possible in a
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Julie wants to create a $5,000 portfolio. She also wants to invest as much as possible in a high-risk stock with the hope of earning a high rate of return. However, she wants her portfolio to have no more risk than the overall market. Which one of the following portfolios is most apt to meet all her objectives?
A. Invest the entire $5,000 in a stock with a beta of 1.0.
B. Invest $2,500 in a stock with a beta of 1.98 and $2,500 in a stock with a beta of 1.0.
C. Invest $2,500 in a risk-free asset and $2,500 in a stock with a beta of 2.0
Related Book For
Fundamentals Of Corporate Finance
ISBN: 9780135811603
5th Edition
Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford
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