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  3. you want to invest ?$40 000 in a portfolio with a

You want to invest ?$40 000 in a portfolio with a beta of no more than...

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Finance

You want to invest ?$40 000 in a portfolio with a beta of nomore than 1.46 and an expected return of 13.4?%. Bay Corporationhas a beta of 1.08 and an expected return of 11.5?%, and CityLimited has a beta of 1.8 and an expected return of 15.16?%. The?risk-free rate is 6?%. Is it possible to create this portfolioinvesting in Bay Corporation and City? Limited? If? so, how muchwill you invest in? each?

Answer & Explanation Solved by verified expert
4.0 Ratings (401 Votes)
Beta Expected Return Bay Corporation 108 1150 City Limited 18 1516 Beta of Bay Corporation 1 108 Beta of City Limited 2 18 Expected Return of Bay Corporation ER1 115 Expected Return of City Limited ER2 1516 Let W1 be the    See Answer
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You want to invest ?$40 000 in a portfolio with a beta of nomore than 1.46 and an expected return of 13.4?%. Bay Corporationhas a beta of 1.08 and an expected return of 11.5?%, and CityLimited has a beta of 1.8 and an expected return of 15.16?%. The?risk-free rate is 6?%. Is it possible to create this portfolioinvesting in Bay Corporation and City? Limited? If? so, how muchwill you invest in? each?

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