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1 . For problems 1 and 2 , use the following data: risk - free rate is 1 . 5 % ; expected return of

1. For problems 1 and 2, use the following data: risk-free rate is 1.5%; expected return of the market portfolio M is 9.69%; standard deviation of the market return is 20%.Your roommate wants advice on how to invest her $55,000 inheritance. She wants to keep $15,000 in safe investments but is willing to risk the other $40,000. According to the CML, what are her expected return and standard deviation? 2. You have $100,000 to invest.a) What are the mean return and standard deviation of your portfolio, if you invest $50,000 in a risk-free asset and $50,000 in the market portfolio M?b) You decide that the 50/50 portfolio is too tame and decide to take on more risk. You invest $95,000 in the market portfolio M and only 5% in the risk-free asset. What are the expected return and standard deviation?

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