Question: Security Beta Standard Deviation Expected return S&P 500 1.0 20% 8.0% Risk-free security 0.0 0% 4.0% Stock A 0.6 15% ()% Stock B 30% 12.0%

Security Beta Standard Deviation Expected return S&P 500 1.0 20% 8.0% Risk-free security 0.0 0% 4.0% Stock A 0.6 15% ()% Stock B 30% 12.0% Stock C 1.2 25% ()% 6) A complete portfolio is composed of the risk-free security and a risky portfolio, Q, constructed with two risky securities, X and Y. Given the risk-free rate of 4%. X has an expected return of 10%, and Y has an expected return of 20%. i) Given the expected return of 14% for the risky portfolio Q, what are the weights for X and Y, respectively? (15points) ii) You would like to form a complete portfolio with the expected return of 19%. What are the wights for the risk-free security and the risky portfolio Q, respectively? (15points)
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