Question
In: Finance
4.Jane wants to create a $10,000 portfolio. She also wants to invest as much as possible...
4.Jane wants to create a $10,000 portfolio. She also wants to
invest as much as possible in a high risk stock with the hope of
earning a high rate of return. However, she wants her portfolio to
have no more risk than the overall market. Which one of the
following portfolios is most apt to meet all of her
objectives?
A.Invest the entire $ 10,000 in a stock with a beta of
1.0
B.Invest $5,000 in a stock with a beta of 1.98 and S5,000 in a
stock with a beta of 1.0
C.Invest $5,000in a stock with a beta of 1.0, $2,500 in a
risk-free asset, and $2,500 in a stock with a beta of 2.0
D.I nvest $5,000 in a risk-free asset and $5,000 in a stock
with a beta of 2.0
E.Invest S4,000 in a stock with a beta of 3, $4,000 in a
risk-free asset, and $2,000 in a stock with a beta of
1.0
Solutions
jeff jeffy answered 1 year agoRelated Solutions
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A person wants to invest $10,000 into stocks: a high tech
company (T) with an expected annual return of 12% and a risk index
of 8; and a regulated power company (P) with an expected annual
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portfolio risk must be no more than 6 and the proportion of
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$10,949.07
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deviation of returns?
State of
Economy
Probability of State
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Rate of Return if
State...
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