You Are Considering Investing $1000 in a Complete Portfolio

question 41

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%. If you decide to hold 25% of your complete portfolio in the risky portfolio and 75% in the Treasury notes then the dollar values of your positions in X and Y respectively would be ________ and ________.

• A)$300, $450
• B)$150, $100
• C)$100, $150
• D)$450, $300

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Definitions:

Dangerous Situation

A scenario that poses a risk of harm or injury to individuals or property.

Theoretical Diversity

The existence and application of multiple theories within a field of study to understand and explain phenomena.

Experience of Emotion

The complex, subjective feeling states that arise from cognitive and physiological reactions to stimuli, often associated with mood, temperament, personality, and motivation.

Subjective Well-being

An individual's personal assessment of their overall happiness and life satisfaction.