Assume that the expected rate of return on the market portfolio is $23 %$ and the rate of return on T-bills (the risk-free rate) is $7 %$. The standard deviation of the market is $32 %$. Assume that the market portfolio is efficient.

(a) What is the equation of the capital market line?

(b) (i) If an expected return of $39 %$ is desired, what is the standard deviation of this position? (ii) If you have $\$ 1,000$ to invest, how should you allocate it to achieve the above position?

(c) If you invest $\$ 300$ in the risk-free asset and $\$ 700$ in the market portfolio, how much money should you expect to have at the end of the year?