Problem

Analyzing a Portfolio You have $100,000 to invest in a portfolio containing Stock X...

Analyzing a Portfolio You have $100,000 to invest in a portfolio containing Stock X , Stock Y , and a risk-free asset. You must invest all of your money. Your goal is to create a portfolio that has an expected return of 11.22 percent and that has only 96 percent of the risk of the overall market. If X has an expected return of 15.35 percent and a beta of 1.55, Y has an expected return of 9.4 percent and a beta of .7, and the risk-free rate is 4.5 percent, how much money will you invest in Stock X ? How do you interpret your answer?

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