1- If the period 19262015 is assumed to be representative of future expected performance, then we use the following data to compute the fraction allocated to equity: A = 4, E(r_M) r_f = 8.30%, _M = 20.59% (we use the standard deviation of the risk premium from Table 6.7). Then y^* is:

2- If the period 19701991 is assumed to be representative of future expected performance, then we use the following data to compute the fraction allocated to equity: A = 4, E(r_M) r_f = 5.33%, _M = 18.20% and y* is:

3 - If the W_D = 0.20 the W_E =