You Are Considering Investing $1000 in a Complete Portfolio

question 23

Multiple Choice

You are considering investing $1000 in a complete portfolio. The complete portfolio is composed of Treasury notes that pay 5% and a risky portfolio, P, constructed with two risky securities X and Y. The optimal weights of X and Y in P are 60% and 40% respectively. X has an expected rate of return of 14% and Y has an expected rate of return of 10%. To form a complete portfolio with an expected rate of return of 11%, you should invest ________ of your complete portfolio in Treasury notes.

• A)19%
• B)25%
• C)36%
• D)50%

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Definitions:

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The method of generating reports that reveal a company's financial condition to its management, investors, and governmental bodies.