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 2 years agoRelated Solutions
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Asset
Investment BETA
stock
A $85,000
0.8
stock B
$165,000 1.15
stock C
---------- 1.4
Riskfree asset _______
------
Please fill in the
blanks and show all work
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X
Y
E[r]
8%
18%
St.Dev
10%
20%
The correlation between the returns of the two assets is 0.
Answer in decimal form and, if you have two answers report the
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