2. Data: RZ=14.5%;rf=2%; and Z=4% a. Compute the expected rates of return and levels of risk for the Capital Allocation Line (CAL) using values of (i) y=0(3 points) (ii) y=0.5(3 points) (iii) y=1.0 (3 points) (iv) y=2.0(3 points) Initial Margin =(14.5%2%)/4%=2.5 b. In a(iv) is leverage being used? What are the two outcomes of leverage? (8 points) Is the investor risk averse? Note: Answer in terms of risk and return. c. In a(iv) where y=2, what is the initial margin value if margin trading is used? ( 5 points) 2. Data: RZ=14.5%;rf=2%; and Z=4% a. Compute the expected rates of return and levels of risk for the Capital Allocation Line (CAL) using values of (i) y=0(3 points) (ii) y=0.5(3 points) (iii) y=1.0 (3 points) (iv) y=2.0(3 points) Initial Margin =(14.5%2%)/4%=2.5 b. In a(iv) is leverage being used? What are the two outcomes of leverage? (8 points) Is the investor risk averse? Note: Answer in terms of risk and return. c. In a(iv) where y=2, what is the initial margin value if margin trading is used? ( 5 points)