Question: Ms. Chambers wants to change the expected return of her portfolio. Currently Ms. Chambers has all her money in U.S. Treasury Bills with a return

Ms. Chambers wants to change the expected return of her portfolio. Currently Ms. Chambers has all her money in U.S. Treasury Bills with a return of 3%. She can switch some of her money into a risky portfolio with an expected return of 15%. What percent of her wealth will she need to invest in the risky portfolio to get an expected return of 5%? Of 7%? Of 9%? Of 11%? Of 13%? Of 15%? Is there a pattern here?

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The weight in the riskfree asset is 1 w and the weight in the risky portfolio is w and the total of ... View full answer

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