A $36,000 portfolio is invested in a risk-free security and two stocks.The beta of Stock A is 1.29 while the beta of Stock B is 0.90.One-half of the portfolio is invested in the risk-free security.How much is invested in Stock A if the beta of the portfolio is 0.58?
A)$6,000
B)$9,000
C)$12,000
D)$15,000
E)$18,000

Question

Quizplus · Accepted Answer

β_P = 0.58 = [A/$36,000][1.29] + [($36,000 - A - $18,000)/$36,000)][0.90] + [0][0.50]A = $12,000

A $36,000 Portfolio Is Invested in a Risk-Free Security and Two