(CML) The market portfolio of the Tierra del Fuego stock market has an expected return E r( ) M = 22% and a standard deviation of returns σM = 19%.

The risk-free rate is rf

= 7%.

a. What is the equation of the Tierra del Fuego CML?

b. Compute the following CML portfolios:

i. A portfolio composed of 35% risk-free asset and 65% market portfolio.

ii. A portfolio composed of 120% of the market portfolio.

iii. A portfolio that yields a return of 15%.

iv. A portfolio that yields a return of 23%.

v. A portfolio with standard deviation of 35%.

vi. A portfolio with standard deviation of 5%.