You want to invest $1,000 in a complete portfolio. The complete portfolio is composed of...
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You want to invest $1,000 in a complete portfolio. The complete portfolio is composed of treasury bills that pay 5% and a risky portfolio, P, constructed with 2 risky securities X and Y. The weight 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%, what proportion of your complete portfolio you should invest in treasury bills?
2. To form a complete portfolio with an expected rate of return of 8%, what proportion of complete portfolio you should invest in the
Treasury bill, asset X and asset Y?
3. What are the dollar values of your positions in X and Y, if you decide
to hold 30% of your complete portfolio in the risky portfolio and 60%
in the treasury bills?
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