How much should you invest in the risk-free security

Assignment Help Portfolio Management

Reference no: EM131451626

You want to create a $72,000 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 14.7 percent. You want to own $25,000 of Stock B. The risk-free rate is 3.6 percent and the expected return on the market is 12.1 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?

Select one: a. $12,921 b. $12,987 c. $13,550 d. $13,315 e. $12,775

Reference no: EM131451626

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