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Problem:

You have $100,000 to invest in a portfolio containing Stock X, Stock Y and a risk-free asset. You must invest all your money. Your goal is to create a portfolio that has an expected return of 11.22% and that has only 96% of the risk of overall market.

Required:

If Stock X has an expected return of 15.35% and a beta of 1.55, Stock Y has an expected return of 9.4% and a beta of 0.7 and the risk-free rate is 4.5%, how much money will you invest in Stock X?

Note: Provide support for your underlying principle.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91166694

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