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Question: Assume that you manage a risky portfolio with an expected rate of return of 22% and a standard deviation of 35%. The T-bill rate is 6%.

Your risky portfolio includes the following investments in the given proportions:

Stock A 33 %
Stock B 36 %
Stock C 31 %

Suppose that your client decides to invest in your portfolio a proportion y of the total investment budget so that the overall portfolio will have an expected rate of return of 18%.

a. What is the proportion y? (Round your answer to the nearest whole number. Omit the "%" sign in your response.)

Proportion y %

b. What are your client's investment proportions in your three stocks and the T-bill fund? (Do not round intermediate calculations. Round your answers to 2 decimal place. Omit the "%" sign in your response.)

Investment

Proportions

T-Bills %

Stock A %

Stock B %

Stock C %

c. What is the standard deviation of the rate of return on your client's portfolio? (Do not round intermediate calculations. Round your answer to 2 decimal place. Omit the "%" sign in your response.)

Standard deviation %

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M92776041

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