Question

You are considering investing $1,200 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 70% and 30% respectively. X has an expected rate of return of 13%, and Y has an expected rate of return of 12%. To form a complete portfolio with an expected rate of return of 8%, you should invest approximately __________ in the risky portfolio. This will mean you will also invest approximately __________ and __________ of your complete portfolio in security X and Y, respectively.

Multiple Choice

• 0%; 70%; 30%

• 50%; 35%; 15%

• 39%; 27%; 12%

• 25%; 57%; 18%

Answer 1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE