3. Consider a risky portfolio. The end-of-year cash flow derived from the portfolio will be either $50,000 with probability 0.6 or $150,000 with probability 0.4 . The alternative riskless investment in T-bill pays 5%. This risky portfolio is currently selling (asking price) for $80,000 (a) If you require a risk premium of 10% to be interested in investing in this portfolio, will you pay the asking price for this portfolio? Explain. (Hint: you can first figure out how much the portfolio is worth to you now as in our example from the lecture) (b) If your friend is willing to pay the asking price for this portfolio, what is her expected return? What can you say about her risk attitude compared to yours? Is she more risk averse or less risk averse than you