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You are the portfolio manager for a mutual fund. Your fund has an expected return of 15% with a standard deviation of 24% and the T-bill rate is 3%.

Your client chooses to invest 60% of her retirement pension in your fund and the remaining 40% in T-bills.

Std Dev Portfolio = 14.4% Expected Return Portfolio= 10.2% Sharpe Ratio Portfolio= .70833

a. Sketch the CAL (Capital Allocation Line) of your portfolio on an expected return-standard deviation diagram

b. what is the slope of the CAL?

c. where is your client on this sketch?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91419710

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