You want your portfolio beta to be 1.10. Currently, your portfolio consists of $6,000 invested in stock A with a beta of 1.47 and $4,000 in stock B with a beta of 0.84. You have another $10,000 to invest and want to divide it between an asset with a beta of 1.74 and a risk-free asset. How much should you invest in the risk-free asset?
You want your portfolio beta to be 1.10. Currently, your portfolio consists of $6,000 invested in stock A with a beta of 1.47 and $4,000 in stock B with a beta of 0.84. You have another $10,000 to invest and want to divide it between an asset with a beta of 1.74 and a risk-free asset. How much should you invest in the risk-free asset?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:You want your portfolio beta to be
1.10. Currently, your portfolio
consists of $6,000 invested in stock
A with a beta of 1.47 and $4,000 in
stock B with a beta of 0.84. You
have another $10,000 to invest and
want to divide it between an asset
with a beta of 1.74 and a risk-free
asset. How much should you invest
in the risk-free asset?
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