Create a portfolio that has an expected return

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You have $120,000 to invest in a portfolio containing Stock X, Stock Y, and a risk-free asset. You must invest all of your money.

Your goal is to create a portfolio that has an expected return of 15 percent and that has only 70 percent of the risk of the overall market.

If X has an expected return of 40 percent and a beta of 1.9, Y has an expected return of 23 percent and a beta of 1.1, and the risk-free rate is 8 percent, how much money will you invest in Stock Y?

Reference no: EM131913010

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