Jamie has wealth of $10,000 to invest. The market portfolio consists of three stocks with 20% being Stock A, 40% being Stock B and the remainder Stock C. The expected return on this market portfolio is 14%. The risk free rate is 5%. The CAPM holds. Suppose Jamie's optimal portfolio has an expected return of 23%, what are the dollar values of her investments in A, B. C and the risk free asset?

Jamie has wealth of $10,000 to invest. The market portfolio consists of three stocks with 20% being Stock A, 40% being Stock B and the remainder Stock C. The expected return on this market portfolio is 14%. The risk free rate is 5%. The CAPM holds. Suppose Jamie's optimal portfolio has an expected return of 23%, what are the dollar values of her investments in A, B. C and the risk free asset?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 5P

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