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You are considering investing $1,000 in a T-bill that pays 0.05 and a risky portfolio, P, constructed with two risky securities, X and Y. The weights of X and Y in P are 0.60 and 0.40, respectively. X has an expected rate of return of 0.14 and variance of 0.01, and Y has an expected rate of return of 0.10 and a variance of 0.0081. What would be the dollar values of your positions in X and Y, respectively, if you decide to hold 40% of your money in the risky portfolio and 60% in T-bills

Sagot :

Answer:

The answer is "[tex]x=\$240 \ and \ y= \$160[/tex]"

Explanation:

Total amount[tex]= \$1000[/tex]

when [tex]40\%[/tex]  a risky portfolio [tex]= 0.4 \times \$1000=\$400[/tex]

calculating the risky portfolio value on [tex](\$400)[/tex]

When [tex]60\%[/tex] consist of x

[tex]\to \$400 \times 0.6\\\\\to \$240[/tex]

When [tex]40\%[/tex] consist of y

[tex]\to \$400 \times 0.4\\\\\to \$160[/tex]

So, the dollar value in  [tex]x=\$240 \ and \ y= \$160[/tex]

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