You have $25 000 to invest in a portfolio containing Stock A

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You have $25 000 to invest in a portfolio containing Stock A

You have $25,000 to invest in a portfolio containing Stock A and Stock B. Assume that Stock A has an expected return pf 13%, and Stock B has an expected of 9%.

a) How much money will you invest in stock B if your goal is to create a portfolio that has an expected returrn of 11%?

b) How much money will you invest in stock A if your goal is to create a portfolio that has an expected return of 13%? Can we label this portfolio as a “well-diversified” portfolio?

c) How much money will you invest in stock B if your goal is to create a portfolio that has an expected return of 14%? How do you interpret your answer?

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You have $25 000 to invest in a portfolio containing Stock A