Expected return on portfolio 2 Line (capital market line) II Y Line 35% in risk-free asset -40% in risk-free asset 65% in stocks represented by Q 140% in stocks represented by Q Risk-free rate (Rp) 70% in risk-free asset 30% in stocks represented by Standard deviation of portfolio's return Portfolio Q is composed of 30 percent AT&T, 45 percent GM, and 25 percent IBM.
Expected return on portfolio 2 Line (capital market line) II Y Line 35% in risk-free asset -40% in risk-free asset 65% in stocks represented by Q 140% in stocks represented by Q Risk-free rate (Rp) 70% in risk-free asset 30% in stocks represented by Standard deviation of portfolio's return Portfolio Q is composed of 30 percent AT&T, 45 percent GM, and 25 percent IBM.
Chapter8: Analysis Of Risk And Return
Section: Chapter Questions
Problem 20P
Question
Based on this image, how many stocks does it take to eliminate most of the diversifiable risk?
![Expected return
on portfolio
2
Line (capital market line)
II
Y
Line
35% in risk-free asset -40% in risk-free asset
65% in stocks
represented by Q
140% in stocks
represented by Q
Risk-free
rate (Rp)
70% in risk-free asset
30% in stocks
represented by
Standard
deviation
of portfolio's
return
Portfolio Q is composed of 30 percent AT&T, 45 percent GM, and 25 percent IBM.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F5c450d38-d0ee-4024-80c7-43303412bfa1%2Fdcccc288-c9df-4208-94c4-bd4cf2732ad2%2Fy9h2xi_processed.png&w=3840&q=75)
Transcribed Image Text:Expected return
on portfolio
2
Line (capital market line)
II
Y
Line
35% in risk-free asset -40% in risk-free asset
65% in stocks
represented by Q
140% in stocks
represented by Q
Risk-free
rate (Rp)
70% in risk-free asset
30% in stocks
represented by
Standard
deviation
of portfolio's
return
Portfolio Q is composed of 30 percent AT&T, 45 percent GM, and 25 percent IBM.
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