How much should you invest in the risk-free asset to obtain, Financial Management

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How much should you invest in the risk-free asset to obtain

You desire a portfolio beta of 1.1. Currently, your portfolio consists of $100 invested in Stock A with a beta of 1.4 and $300 in Stock B with a beta of .6. You have another $400 to invest and want to divide it between Stock C with a beta of 1.6 and a risk-free asset. How much should you invest in the risk-free asset to obtain your desired beta?

a. $125

b. $50

c. $100

d. $300

e. $350

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Financial Management: How much should you invest in the risk-free asset to obtain

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