Suppose you have $2,000 to invest.The market portfolio has an expected return of 10.5 percent and a standard deviation of 16 percent.The risk-free rate is 3.75 percent.How much should you invest in the risk-free asset if you wish to have a 15 percent return on the portfolio?
A) $667
B) -$667
C) $1,333
D) -$1,333

Question

Quizplus · Accepted Answer

Weight in risk-free asset,11ea8229_34c8_8d6b_bbd8_57189b72bcd0_TB1726_11 Amount invested in risk-free asset = $2,000*(-0.6667)= -$1,333

Suppose You Have $2,000 to Invest