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g You want to create a portfolio equally as risky as the market, and you have $500,000 to invest. Information about the possible investments is given below: Asset Investment Beta Stock A $ 147,000 .92 Stock B $ 133,000 1.37 Stock C 1.52 Risk-free asset How much will you invest in Stock C

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hyderali230

Answer:

I will invest $220,000

Explanation:

Let the Investment in Stock C x

Weightage of Investment C x / 500,000

Weightage beta of Investment C x (1.52) / 500,000

Total Weightage =

Total Weightage of Beta

Stocks   Investment   Weightage                            Beta    Weighted beta

  A         $147,000    (147000/500,000) = 0.294    0.92    0.27

  B         $133,000    (133000/500,000) = 0.266    1.37     0.36

  B         $220,000   (220000/500,000) = 0.44     1.52     0.67

Total Beta                                                                              1.30

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