need help with a reply to second post. thank you in advance!

8-4 Is it possible to construct a portfolio of real-world stocks that has a required return equal to the risk-free rate? Explain. It is possible to construct a portfolio of real world stocks witha required return equal to the risk free rate. Such a portfolio is called zero beta portfolio. To construct such a portfolio the investor must select stocks in such a way that the combined weighted beta of the portfolio is zero. For this the investor has to select positive and negative beta stocks. Positive beta stocks move with the market, while negative beta stocks move against the market. This when weighted with the proportions of investment, will give a beta of portfolio which is zero or close to zero. Hi Jamie, I think that under this strategy the portfolio's strength is diversification and the number of assets held. This means that the portfolio variance would be small and not as risky, however, my concern is the rate of return; is it worth the time and effort? I am undecided at this point, but I can see the potential and the con's of a zero beta portfolio. 6 Reply