1.Investors can form complete portfolios out of 2 assets. A T-bill with a return of 5%, and a risky portfolio with an expected return of 15% and a return volatility of 20%. An investor invests 20% of his complete portfolio in the T-bill and the remaining 80% in the risky portfolio. What is the risk premium of his complete portfolio?

2.

Bill formed his optimal complete portfolio worth $1000 out of 2 assets: A T-bill with a return of 5%, and a risky portfolio P with an expected return of 15% and a return volatility of 20%. Bill's coefficient of risk aversion is 2. Which of the following statements is true about Bill's optimal complete portfolio?

		Bill invests nothing in the risky portfolio P.
		Bill buys $500 worth of the T-bill.
		Bill invests $1000 in the risky portfolio.
		Bill borrows $250 at the risk free rate.