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The market is expected to yield 12% and the risk free rate is 2%. You currently...

The market is expected to yield 12% and the risk free rate is 2%. You currently hold a portfolio with a beta of 0.75 worth $25,400. You want to invest additional funds (i.e money will be added to your holdings) in another portfolio with a beta of 2.9. How much will you have to invest in the new risky asset so that the resulting portfolio will have an expected return of 16%?

The answer is 10,885.7

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Weight of asset = Amount invested in asset / Sum of investments in all assets

Please upvote if the ans is helfpul.In case of doubt,do comment.Thanks.

jeff jeffy answered 1 year ago
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