4. (5 pts.) Assume that you manage a risky portfolio with an expected rate of return of 25% and a standard deviation of 27%. The T-bill rate is 7%. Your client chooses to invest 50% of a portfolio in your fund and 50% in a T-bill money market fund.

a. (1 pt.) What is the expected return and standard deviation of your client's portfolio?

b. (2 pts.) What is the reward-to-volatility ratio (S) of your risky portfolio and your client's overall portfolio?

c. (2 pts.) Draw the CAL of your portfolio on an expected return/standard deviation diagram. What is the slope of the CAL? Show the position of your client on your fund's CAL.