math/stock

posted by .

You want to create a $75,000 portfolio comprised of two stocks plus a risk-free security. Stock A has an expected return of 13.6 percent and stock B has an expected return of 11.4 percent. You want to own $30,000 of stock B. The risk-free rate is 4 percent and the expected return on the market is 10 percent. If you want the portfolio to have an expected return equal to that of the market, how much should you invest in the risk-free security?

Respond to this Question

First Name
School Subject
Your Answer

Similar Questions

  1. fiance

    You want to create a $75,000 portfolio comprised of two stocks plus a risk-free security. Stock A has an expected return of 13.6 percent and stock B has an expected return of 11.4 percent. You want to own $30,000 of stock B. The risk-free …
  2. Math

    Sonny owns $5,000 worth of High Risk Enterprises (HRE) stock. HRE has a standard deviation of 16 percent and a beta of 2.0. He wants to invest another $5,000 and create a $10,000 portfolio that is equally as risky as the overall market. …
  3. Business Fin

    The market’s required return on Gitche Gumee Oil Company stock is currently 13.8 percent. If the expected return on the market portfolio is 12.6 percent and the risk-free rate is 3.5 percent, what is the beta of Gitche Gumee stock?
  4. principle of investment

    What is the expected return on a portfolio consisting of an equal amount invested in each stock?
  5. Finance

    A portfolio consists of three stocks. The weight, expected rate of return and systematic risk for each stock are provided in the following table. Stock Investments Expected return A $7,500 20% B $10,000 15% C $2,500 10% Beta 1.5 1 …
  6. Finance

    You own a portfolio that has $1500 invested in Stock A and $2,600 invested in Stock B. If the expected returns on these stocks are 11.1 percent and 16.7 percent, respectively, what is the expected return on the portfolio?
  7. Finance

    In February 2011 the risk-free rate was 4.50 percent, the market risk premium was 7.00 percent, and the beta for Dell stock was 1.50. What is the expected return that was consistent with the systematic risk associated with the returns …
  8. Finance

    we have two stocks Stock A and Stock B, Both stocks have the same expected rate of return 11%, but have different Standard Deviation 12%, and 20% respectively. based on the information above can we conclude that any rational risk-averse …
  9. algebra

    You have 10,000.00 to invest in two types of stock. the expected annual returns for the stocks are: stock A - 10 percent, stock b - 6 percent. You want the overall annual return to be 8 percent. Write a linear system of equations that …
  10. finance

    A stock has a beta of 2.0. A security analyst who specializes in studying this stock expects its return to be 24%. Suppose the risk-free rate is 6 percent and the market-risk premium is 10 percent. Is the stock overvalued or undervalued …

More Similar Questions