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    Determining how to invest $1 Million.

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    Have you ever daydreamed about receiving a $1 million check? How would you invest it?

    © BrainMass Inc. brainmass.com March 4, 2021, 5:38 pm ad1c9bdddf
    https://brainmass.com/business/finance/determining-how-to-invest-1-million-3834

    Solution Preview

    We have two good options:
    1) Treasury Bills, which offer an absolutely safe return, and
    2) The stock market.

    Your investment policy is going to depend on your tolerance for risk.

    Suppose that you invest 80% of your money in the stock market and invest the remaining 20% in government T-Bills. Then ...

    Solution Summary

    Have you ever daydreamed about receiving a $1 million check? How would you invest it?

    Your investment policy is going to depend on your tolerance for risk.

    Suppose that you invest 80% of your money in the stock market and invest the remaining 20% in government T-Bills. Then the beta of your overall portfolio will be a mixture of the beta of the market and the beta of the T-Bills.

    Beta of Portfolio = (proportion in market X beta of market) + (proportion in T-Bills X beta of T-Bills)
    B = (.8 X B-Market) + (.2 X B-TBills)
    B = (.8 X 1) + (.2 X 0) = .8

    $2.49

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