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3. Mary has $100 to invest in either a risky stock or a risk-free treasury bill. The table below shows the expected return and risks
3. Mary has $100 to invest in either a risky stock or a risk-free treasury bill. The table below shows the expected return and risks for each sset tocks easury Bills Expected Return 30% 390 Risk 40 a. Assume Mary's overall portfolio risk is 30. i. ii. What is her expected return for her portfolio. What proportion of her overall money does she invest in stocks? b. What if her portfolio's expected return is 15%. i. ii. What is her overall portfolio risk? What proportion of her overall money does she invest in stocks? 4. What is an isoquant curve? Draw an isoquant map that includes three isoquant curves when inputs are: a. b. c. Perfect substitutes Fixed ratio (leontiff) Neither perfect substitutes nor fixed ratio (normal isoquants)
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