For a portfolio with a beta of 0.65...
0.65 / 1.24 = 0.52419
FYI: 1 - 0.52419 = 0.47581
$6,000 * 0.52419 = $3,145.16 in stock A
6,000 - 3,145.16 = $2,854.84 in the risk free asset
FYI: E(Rport) = (weight stockA * rate stockA) + (weight RFA * rate RFA)
= 0.52419(0.1368) + 0.47581(0.028)
= 0.07171 + 0.01332 = 0.08503, or 8.503%
if what you meant here: "the portfolio beta is one 0.65" is that the portfolio beta should equal one, recalculate using weight for stock A of 1 / 1.24 = 0.80645
A stock has a beta of 1.24 and expected return of 13.68, risk free asset of 2.8 percent. You want to create a $6000 portfolio consisting of stock A and the risk free security that the portfolio beta is one 0.65.
