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Papessa [141]
3 years ago
14

You are considering investing $1,000 in a T-bill that pays 0.05 and a risky portfolio, P, constructed with 2 risky securities, X

and Y. The weights of X and Y in P are 0.60 and 0.40, respectively. X has an expected rate of return of 0.14 and variance of 0.01, and Y has an expected rate of return of 0.10 and a variance of 0.0081. If you want to form a portfolio with an expected rate of return of 0.10, what percentages of your money must you invest in the T-bill, X, and Y, respectively if you keep X and Y in the same proportions to each other as in portfolio P
Business
1 answer:
Leokris [45]3 years ago
3 0

Answer:

% in T bills = 18.92%, % in P = 81.08%

Explanation:

Portfolio return = Weighted average return

Return of portfolio P = 0.14*0.6 + 0.10*0.4

Return of portfolio P = 0.124

Let % money in T bills be x

0.11 = 0.05*x + 0.124*(1-x)

0.11 = 0.05x + 0.124 - 0.124x

0.014 = 0.074x

x = 18.92%

Hence, % in T bills = 18.92%, % in P = 81.08%

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Business partnerships must involve partners who are willing to do which of the following
Scilla [17]

Answer:

B)learn, adapt and adjust to others

Explanation:

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6 0
4 years ago
a company product sells for 170 and has variable cost of 50 associated with the product what is its contribution margin per unit
Stella [2.4K]

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Contribution margin per unit = 170 - 50

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Contribution margin ratio = [120 / 170]100

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