You want to create a portfolio equally as risky as the market, and you have $1,100,000 to invest. Consider the following information:
Asset  Investment  Beta  
Stock A  $330,000  0.70  
Stock B  $220,000  1.25  
Stock C  1.50  
Riskfree asset  

Let us assume the investment in stock C=x so the investment is riskfree asset is equal to (1,100,000 330000 220000 x)
C = x
Risk free asset = 550000  x
The beta of the market portfolio is equal to one
[330000 *.70 + 220000 *1.25 + x * 1.50 + (550000 x) * 0] / 1100000 = 1 [Beta of risk free asset is zero]
[506000 + x * 1.50 ] = 1100000
x = $396000
550000 x = $154000
a) Investment in Stock C = $396000
b) Investment in riskfree asset = $154000
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