You would like to invest $19,000 and have a portfolio expected return of 12.3 percent.You are considering two securities,A and B.Stock A has an expected return of 15.6 percent and B has an expected return of 10.3 percent.How much should you invest in Stock A if you invest the balance in Stock B?
A)$6,807
B)$7,170
C)$7,411
D)$7,937
E)$8,626

Question

Quizplus · Accepted Answer

E(R_P) = 0.123 = 0.156x + 0.103(1 - x)x = 0.377358Investment_A = 0.377358 × $19,000 = $7,170

You Would Like to Invest $19,000 and Have a Portfolio