(CML with leverage) With reference to exercise 14 above, you are feeling lucky and decide to take on a riskier portfolio. In particular, in addition to your $5,000 gift, you are able to borrow another $1,000 at the risk-free rate of 10%. You decide to invest this total of $6,000 in a portfolio containing a mix of Hilda’s Hybrids and Hilda’s Hubby.

a. What will be the expected return and the expected risk (standard deviation) for this more daring portfolio?

b. In what proportion will you invest your $6,000 in each stock and the risk-free asset, if you invest optimally?