You would like to make a portfolio that earns expected annual returns of 6% using the market portfolio and the risk-free security. 

What positions (weights) in the components would be required to achieve this objective if the market is expected to return 9% and the risk-free rate is 2.5%?  Interpret these weights?

Answer rating: 100% (QA)

SOLUTION To achieve an expected annual return of 6 using the market portfolio and the riskfree security we can use the Capital Asset Pricing Model CAP... View the full answer