(Answered) There are only 6 investments available 1 stock fund m

Management Studies

There are only 6 investments available: 1) Stock Fund M, Expected Return = 25%, Standard Deviation = 32%; 2) Stock Fund R, Expected Return = 39%, Standard Deviation = 67%; 3) T-bills, Expected Return = 4%. Note that the correlation coefficient between funds M and R is .1.

A) Calculate the optimal risky portfolio and its expected return and standard deviation.

B) Find the slope of the CAL supported by T-bills and the optimal portfolio.

C) What percentage of their assets will an investor with M=5 invest in Funds M and R? What percentage will they invest in T-bills?

D) What percentage of their TOTAL ASSETS will the investor in part C have invested in Fund M?

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