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5. A portfolio is comprised of a stock (such as IBM) and a risk-free asset (such as 3-month Treasury bill). IBM stock has an expected

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5. A portfolio is comprised of a stock (such as IBM) and a risk-free asset (such as 3-month Treasury bill). IBM stock has an expected return of 12% and a standard deviation of 15%. Treasury bill (T-bill) has an expected return of 4% and zero standard deviation (why?). Since T-bill is a risk-free security, the covariance between the IBM stock return and T-bill return is zero (why?). If you want to earn a retum of 10% on your portfolio, how much of your investment should be in IBM stock? How much in T-bill? What is the standard deviation of your portfolio return? Be specific

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