12? QUESTION 12Investors can form complete portfolios out of a risk-free asset and a riskyportfolio. The risky portfolio can be formed out of 2 risky stocks: AAPL withan expected return of 10% and volatility of 15%, and MSFT with an expectedreturn of 14% and volatility of 18%. Mary is more risk averse than Tom andboth has a total of $1000 to invest in the risky assets. According to portfoliotheory, which of the following is consistent with both investors making theoptimal portfolio choices?Mary invests $200 in AAPL and $800 in MSFT; Tom invests $200 in AAPL and$800 in MSFT.Mary invests $0 in AAPL and $1000 in MSFT; Tom invests $1000 in AAPL and$0 in MSFT.Mary invests $1000 in AAPL and $0 in MSFT; Tom invests $0 in AAPL and$1000 in MSFT.Mary invests $500 in AAPL and $500 in MSFT; Tom invests $900 in AAPL and$100 in MSFT.

We will be evaluating the portfolio weights choice as per the investor risk appetite.

QUESTION 12 Investors can form complete portfolios out of a risk-free asset and a risky portfolio. The risky portfolio can be formed out of 2 risky stocks: AAPL with an expected return of 10% and volatility of 15%, and MSFT with an expected return of 14% and volatility of 18%. Mary is more risk averse than Tom and both has a total of $1000 to invest in the risky assets. According to portfolio theory which

QUESTION 12 Investors can form complete portfolios out of a risk-free asset and a risky portfolio. The risky portfolio can be formed out of 2 risky stocks: AAPL with an expected return of 10% and volatility of 15%, and MSFT with an expected return of 14% and volatility of 18%. Mary is more risk averse than Tom and both has a total of $1000 to invest in the risky assets. According to portfolio theory which

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 16P

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