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4) If you are a mean-variance investor, then your wealth portfolio should be composed of a position on the optimal risky portfolio r0 (with weight

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4) If you are a mean-variance investor, then your wealth portfolio should be composed of a position on the optimal risky portfolio r0 (with weight w0 ) and a position on the risk-free asset rf (with weight 1wo ). Explain how and why w0 is affected by your risk aversion (), the r0 volatility (0), and the r0 sharpe Ratio (SR0). (1 to 2 paragraphs) 4) If you are a mean-variance investor, then your wealth portfolio should be composed of a position on the optimal risky portfolio r0 (with weight w0 ) and a position on the risk-free asset rf (with weight 1wo ). Explain how and why w0 is affected by your risk aversion (), the r0 volatility (0), and the r0 sharpe Ratio (SR0). (1 to 2 paragraphs)

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