You want to achieve an expected annual return of 12% by investing in a risky fund that generates 20% per year and the rest of your budget in t-bill that generates 5% per year. What proportion of your budget should be invested in the risky fund?

Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 3TP: Would you rather have $7,500 today or at the end of 20 years after it has been invested at 15%?...
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You want to achieve an expected annual return of 12% by investing in a risky fund that generates 20% per year and the rest of your budget in t-bill that generates 5% per year. What proportion of your budget should be invested in the risky fund? 

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