Question: You have ( $ 7 9 , 8 0 2 ) to invest in two stocks and the risk - free security.

You have \(\$ 79,802\) to invest in two stocks and the risk-free security. Stock A has an expected return of 10.96 percent and Stock \( B \) has an expected return of 11.18 percent. You want to own \(\$ 31,252\) of Stock B. The risk-free rate is 4.94 percent and the expected return on the market is 10.44 percent. If you want the portfolio to have an expected return equal to that of the market, how much should you invest (in \$) in the risk-free security? Answer to two decimals. (Hint: A negative answer is OK - it means you borrowed (rather than lent or invested) at the risk free rate.)
You have \ ( \ $ 7 9 , 8 0 2 \ ) to invest in two

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!