You want to create a portfolio equally as risky as the market, and you have $500,000...

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You want to create a portfolio equally as risky as the market, and you have $500,000...

You want to create a portfolio equally as risky as the market, and you have $500,000 to invest. Information about the possible investments is given below:

Asset	Investment		Beta
Stock A	$	144,000	.89
Stock B	$	136,000	1.34
Stock C			1.49
Risk-free asset 1. How much will you invest in Stock C? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16). 2. How much will you invest in the risk free asset?

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Answer 1

Answer #1

(144*0.89 + 136*1.34 + x*1.49) = 500*1

X or the amount in C = 127,248.32

amount in risk free asset = 500,000 - 144,000 - 136,000 - 127,248.32 = 92,751.68

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Answer 2

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