You manage a risky portfolio with an expected rate of return of 18% and a standard...
You manage a risky portfolio with an expected rate of return of 18% and a standard deviation of 29%. The T-bill rate is 8%.
Your risky portfolio includes the following investments in the given proportions:
| Stock A | 35 | % |
| Stock B | 35 | % |
| Stock C | 30 | % |
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 14%.
a. What is the proportion y? (Round your answer to the nearest whole number.)
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.)
c. What is the standard deviation of the rate of return on your client’s portfolio?
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You manage a risky portfolio with an expected rate of return of 18% and a standard...
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