The table below shows selected financial data for the Turtle Income fund, the Hare Growth fund, the market portfolio and the risk free asset. If you wanted to build a portfolio out of T-Bills and the market portfolio to mimic the performance of the Turtle Income Fund, what proportion would you invest in the market portfolio? $$\begin{array} { | c | c | c | c | c | }
\hline & \text { Turtle } & \text { Hare } & \text { Market } & \text { Risk Free } \
\hline \begin{array} { c }
\text { Expected } \
\text { Return }
\end{array} & 10 \% & 13 \% & 12 \% & 5 \% \
\hline \text { Std Dev. } & 8.5 \% & 17.9 \% & 11.9 \% & 0 \% \
\hline \text { Beta } & 0.7143 & 1.4 & 1 & 0 \
\hline
\end{array}$$
A)37.1%
B)50.0%
C)71.4%
D)105.7%
E)140.0%

Question

The table below shows selected financial data for the Turtle Income fund, the Hare Growth fund, the market portfolio and the risk free asset. If you wanted to build a portfolio out of T-Bills and the market portfolio to mimic the performance of the Turtle Income Fund, what proportion would you invest in the market portfolio? $$\begin{array} { | c | c | c | c | c | } 
\hline & \text { Turtle } & \text { Hare } & \text { Market } & \text { Risk Free } \
\hline \begin{array} { c } 
\text { Expected } \
\text { Return }
\end{array} & 10 \% & 13 \% & 12 \% & 5 \% \
\hline \text { Std Dev. } & 8.5 \% & 17.9 \% & 11.9 \% & 0 \% \
\hline \text { Beta } & 0.7143 & 1.4 & 1 & 0 \
\hline
\end{array}$$
A)37.1%
B)50.0%
C)71.4%
D)105.7%
E)140.0%

Quizplus · Accepted Answer

The proportion to invest in the market portfolio is equal to the beta of the Turtle Income Fund, which is 0.7143 or 71.4%.

The Table Below Shows Selected Financial Data for the Turtle