1.
Let weight of risky portfolio be w and weight of risk free asset be
1-w
Hence,
w*11%+(1-w)*5%=8%
=>w=(8%-5%)/(11%-5%)
=>w=0.50000
Proportion in risky portfolio=0.50000
Proportion in risk free asset=0.50000
2.
Standard deviation=Proportion in risky asset*Standard deviation of
risky asset=15%*0.5=7.5000%
3.
The first client os more risk averse as he wants lower standard
deviation of 7.5% comapred to the other client's 12%
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