You have $10,000 to invest in a stock portfolio.Your choices are Stock X with an expected return of 13 percent and Stock Y with an expected return of 8 percent.Your goal is to create a portfolio with an expected return of 12.4 percent.All money must be invested.How much will you invest in stock X?
A)$800
B)$1,200
C)$4,600
D)$8,800
E)$9,200

Question

Quizplus · Accepted Answer

E(R_p) = 0.124 = .13x + .08(1 - x); x = 88 percentInvestment in Stock X = 0.88($10,000) = $8,800

You Have $10,000 to Invest in a Stock Portfolio