Homework Answers
ANSWER: 0.7
Variance and standard deviation of Risk free asset = 0, so the variance and Standard deviation of a portfolio with 1 riskfree asset and 1 risky asset = Standard deviation/ Variance of risky asset x weight of risky asset
here Standard deviation of portfolio = Standard deviation of T x weight of T
= 1 x 0.7 = 0.7
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