Business, 14.11.2019 21:31 starboy3506

The current risk-free rate is 6% and the market risk premium is 5%. erika is preparing to invest $30,000 in the market and she wants her portfolio to have an expected return of 12.5%. erika is concerned about bearing too much stand-alone risk; therefore, she will diversify her portfolio by investing in three different assets (two mutual funds and a risk-free security). the three assets she will be investing in are an aggressive growth mutual fund that has a beta of 1.6, an s& p 500 index fund with a beta of 1, and a risk-free security that has a beta of 0. she has already decided to invest 10% of her money in the risk-free asset. in order to achieve the desired expected return of 12.5%, what proportion of erika's portfolio must be invested in the s& p 500 index fund?

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The current risk-free rate is 6% and the market risk premium is 5%. erika is preparing to invest $30...