You are considering investing $10,000 in a complete portfolio. The complete portfolio is composed of Treasury bills that pay 3.75% and a risky portfolio, P, constructed with two risky securities, X and Y.

You are considering investing $10,000 in a complete portfolio. The complete portfolio is composed of Treasury bills that pay 3.75% and a risky portfolio, P, constructed with two risky securities, X and Y. The optimal weights of X and Y in P are 32.7% and 67.3%, respectively. X has an expected rate of return of 8.5%, and Y has an expected rate of return of 13.8%. The dollar values of your positions in X, Y, and Treasury bills would be ________, ________, and ________, respectively, if you decide to hold a complete portfolio that has an expected return of 10.11%.

Solutions

Expert Solution

Weight of each stock in Complete Portfolio = Weight in COmplete Portfolio * weight in Risky Portfolio.

Particulars	Weight in Complete Portfolio	Weight in Ind Portfolio	Each Stock weight	Investment	Amount Invested
X	80%	32.70%	26.16%	$ 10,000.00	$ 2,616.00
Y	80%	67.30%	53.84%	$ 10,000.00	$ 5,384.00
Treasury Bill	20%	100%	20.00%	$ 10,000.00	$ 2,000.00
Total					$ 10,000.00

jeff jeffy answered 2 years ago

Next > < Previous

Related Solutions

You are considering investing $2,500 in a complete portfolio. The complete portfolio is composed of Treasury bills that pay 5% and a risky portfolio, P, constructed with two risky securities, X and Y

You are considering investing $2,500 in a complete portfolio. The complete portfolio is composed of Treasury bills that pay 5% and a risky portfolio, P, constructed with two risky securities, X and Y. The optimal weights of X and Y in Pare 75% and 25% respectively. X has an expected rate of return of 18%, and Y has an expected rate of return of 14%. To form a complete portfolio with an expected rate of return of 8%, you should...

You are considering investing $1,400 in a complete portfolio. The complete portfolio is composed of Treasury...

You are considering investing $1,400 in a complete portfolio. The complete portfolio is composed of Treasury bills that pay 4% and a risky portfolio, P, constructed with two risky securities, X and Y. The optimal weights of X and Y in P are 60% and 40% respectively. X has an expected rate of return of 18%, and Y has an expected rate of return of 14%. To form a complete portfolio with an expected rate of return of 9%, you...

You are considering investing $1,000 in a complete portfolio. The complete portfolio is composed of Treasury...

You are considering investing $1,000 in a complete portfolio. The complete portfolio is composed of Treasury bills that pay 5% and a risky portfolio, P, constructed with two risky securities, X and Y. The optimal weights of X and Y in P are 60% and 40%, respectively. X has an expected rate of return of 14%, and Y has an expected rate of return of 10%. To form a complete portfolio with an expected rate of return of 9.7%, you...

You are considering investing $1,000 in a complete portfolio. The complete portfolio is composed of Treasury...

You are considering investing $1,000 in a complete portfolio. The complete portfolio is composed of Treasury bills that pay 2% and a risky portfolio, P, constructed with two risky securities, X and Y. The optimal weights of X and Y in P are 40% and 60%, respectively. X has an expected rate of return of 0.10 and variance of 0.0081, and Y has an expected rate of return of 0.06 and a variance of 0.0036. The coefficient of correlation, rho,...

You are considering investing $1,000 in a complete portfolio. The complete portfolio is composed of Treasury...

You are considering investing $2,300 in a complete portfolio. The complete portfolio is composed of Treasury...

You are considering investing $2,300 in a complete portfolio. The complete portfolio is composed of Treasury bills that pay 4% and a risky portfolio, P, constructed with two risky securities, X and Y. The optimal weights of X and Y in P are 60% and 40% respectively. X has an expected rate of return of 14%, and Y has an expected rate of return of 12%. To form a complete portfolio with an expected rate of return of 8%, you...

You are considering investing $1,000 in a complete portfolio. The complete portfolio is composed of Treasury...

You are considering investing $1,000 in a complete portfolio. The complete portfolio is composed of Treasury bills that pay 5% and a risky portfolio, P, constructed with two risky securities, X and Y. The optimal weights of X and Y in P are 40% and 60%, respectively. X has an expected rate of return of 0.12 and variance of 0.0081, and Y has an expected rate of return of 0.09 and a variance of 0.0016. The coefficient of correlation, rho,...

You are considering investing $1,000 in a complete portfolio. The complete portfolio is composed of Treasury...

You are considering investing $1,000 in a complete portfolio. The complete portfolio is composed of Treasury bills that pay 5% and a risky portfolio, P, constructed with two risky securities, X and Y. The optimal weights of X and Y in P are 60% and 40%, respectively. X has an expected rate of return of 14%, and Y has an expected rate of return of 10%. The dollar values of your positions in X, Y, and Treasury bills would be...

9) You invest $1,000 in a complete portfolio. The complete portfolio is composed of a risky...

9) You invest $1,000 in a complete portfolio. The complete portfolio is composed of a risky asset with an expected rate of return of 16% and a standard deviation of 20% and a Treasury bill with a rate of return of 6%. A portfolio that has an expected value in 1 year of $1,100 could be formed if you _________. Multiple Choice place 40% of your money in the risky portfolio and the rest in the risk-free asset place 55%...

You are considering investing in two securities, X and Y. The following data are available for...

You are considering investing in two securities, X and Y. The following data are available for the two securities: Security X Security Y Expected return 0.09 0.02 Standard deviation of returns 0.04 0.06 Beta 1.00 0.85 Round your answers to two decimal places. If you invest 40 percent of your funds in Security X and 60 percent in Security Y and if the correlation of returns between X and Y is +0.45, compute the following: The expected return from the...

Subjects