You want your portfolio beta to be 1.30. Currently, your portfolio consists of $200 invested in stock A with a beta of 1.6 and $400 in stock B with a beta of.8. You have another $600 to invest and want to divide it between an asset with a beta of 1.9 and a risk-free asset. Approximately how much should you invest in the risk-free asset?
A) $0
B) $116
C) $160
D) $440
E) $484

Question

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The Answer of You want your portfolio beta to be 1.30. Currently, your portfolio consists of $200 invested in stock A with a beta of 1.6 and $400 in stock B with a beta of.8. You have another $600 to invest and want to divide it between an asset with a beta of 1.9 and a risk-free asset. Approximately how much should you invest in the risk-free asset?
A) $0
B) $116
C) $160
D) $440
E) $484

You Want Your Portfolio Beta to Be 1