Question

QUESTION 6 0.25 points Save Ans You are considering investing $1,000 in a complete portfolio. The complete portfolio is composed of Treasury bills that pay 596 and a risky portfolio, P, constructed with two risky securities, X and Y. The optimal weights of X and Y in P are 60% and 4096 respectively. X has an expected rate of return of 1496, and Y has an expected rate of return of 10%. To form a complete portfolio with an expected rate of return of 896, you should invest approximately --________ in the risky portfolio. This will mean you will also invest approximately ______and ________of your complete portfolio in security X and Y, respectively. 096; 60%6; 40% 2596; 45%; 3096 4096; 2496; 1696 50%; 30%; 20%

Answer 1

Expected return from portfolio - = {(weights of investment & Return) IR. Expected Return from - Consisting of secunities Risky_portfolio X&y = (weight of X . Return expected from X) (weight of y. Return expected from ) = (0.60 X 147.) + (0-40 X 10%) = 12.40%. _ Given expected return from Complete portfolio =_84_ Let 'd' be the weight of the investment nisky (1-x) is the weight of the investment in risk free trasury billes 8 % = (x x 12.4%)+ (1 - x) 54. - 89. = 12.4%. X + 5). — 5-2.26 in Portfolio 1 __X = 407 @Y) 0:40_ i we should - in Risky invest 40% of total amount portfolio And this should be 0.60 :0.40 40% of total invest mat invested in the ratio of in securities X and X

ich of investment in Security X 248.. Cross (407 X @ 604) 7 of investment in security t = 16%. Botti (409. X 409) Bela touch I a. The final $5t 407 Answer is 247 ; 164. In this
the answer is option-C i.e 40%,24%,16%