A complete portfolio with an expected return of 12% is composed of Treasury bills and a risky portfolio P of two stocks, X and Y. The weight of Xin P is 40%. The T-bill rate is 5%, while the expected returns of X and Y are 18% and 25%, respectively. What is the weight of T-bills in the complete portfolio? 39.7% 43.3% 51.8% 59.3%

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter8: Analysis Of Risk And Return
Section: Chapter Questions
Problem 13P
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A complete portfolio with an expected return of 12% is composed of Treasury bills
and a risky portfolio P of two stocks, X and Y. The weight of Xin P is 40%. The T-bill
rate is 5%, while the expected returns of X and Y are 18% and 25%, respectively.
What is the weight of T-bills in the complete portfolio?
39.7%
43.3%
51.8%
59.3%
Transcribed Image Text:A complete portfolio with an expected return of 12% is composed of Treasury bills and a risky portfolio P of two stocks, X and Y. The weight of Xin P is 40%. The T-bill rate is 5%, while the expected returns of X and Y are 18% and 25%, respectively. What is the weight of T-bills in the complete portfolio? 39.7% 43.3% 51.8% 59.3%
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