You want your portfolio beta to be 1.20. Currently,your portfolio consists of $100 invested in stock A with a beta of 1.4 and $300 in stock B with a beta of .6. You have another $400 to invest and want to divide it between an asset with a beta of 1.6 and a risk-free asset. How much should you invest in the risk-free asset?
A) $0
B) $140
C) $200
D) $320
E) $400

Question

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The Answer of You want your portfolio beta to be 1.20. Currently,your portfolio consists of $100 invested in stock A with a beta of 1.4 and $300 in stock B with a beta of .6. You have another $400 to invest and want to divide it between an asset with a beta of 1.6 and a risk-free asset. How much should you invest in the risk-free asset?
A) $0
B) $140
C) $200
D) $320
E) $400

You Want Your Portfolio Beta to Be 1