Question:You
are attempting to build a portfolio using the index model, and are
currently trying to...
Question
You
are attempting to build a portfolio using the index model, and are
currently trying to...
You
are attempting to build a portfolio using the index model, and are
currently trying to decide how much of your risky portfolio you
want in the actively managed portfolio, and how much you want in
the index fund. You have previously computed that, assuming the
beta of your actively managed portfolio is 1, you should put 52% of
your money in the active portfolio, and the rest in the index fund.
If the beta of your actively managed portfolio is actually 0.8,
what percent of your money should you put in the active portfolio?