Total investment will be invested in ogdcl stock

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Saad have saved Rs. 100,000 and he wants to invest in a fund available in the market as suggested by his stock broker friend. This portfolio is a combination of three types of instrument securities i.e. OGDCL stock, Gadoon Textile stock and T-bills. He must invest the entire money in this find. Saad's investment objective is to create such a portfolio with these three assets that his Portfolio should earn him an expected return of 11.22 percent but it should have only 96 percent of the risk of the overall market. The expected returns (beta) on OGDCL, Gadoon and T-bills are 15.35 percent (1.55), 9.4 percent (0.7), and 4.5 percent respectively. How much of Saad's total investment will be invested in OGDCL stock? Also, interpret your answer.

Reference no: EM132569633

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