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2. (10 points) Consider a risky portfolio. The end-of-year cash flow derived from the portfolio will be either $20,000 with probability 0.6 or $100,000 with

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2. (10 points) Consider a risky portfolio. The end-of-year cash flow derived from the portfolio will be either $20,000 with probability 0.6 or $100,000 with probability of 0.4. The riskless investment in T-bill pays 2%. If you require a risk premium of 8%, how much will you be willing to pay for the portfolio

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