You have $100,000 to invest in a portfolio containing Stock X and Stock Y. Your goal is to create a portfolio that has an expected return of 10.6 percent.
a) If Stock X has an expected return of 11.4 percent and a beta of 1.25, and Stock Y has an expected return of 8.68 percent and a beta of .85, how much money will you invest in stock Y?
b) What is the beta of your portfolio?