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5. Your best friend from high-school, Erlich, is contemplating dividing his portfolio between two assets, shares of BLESSLA {a transportation company that makes vehicles without

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5. Your best friend from high-school, Erlich, is contemplating dividing his portfolio between two assets, shares of BLESSLA {a transportation company that makes vehicles without front grills] which have an expected return of 30% and a standard deviation of 90%, and a safe asset, government debt, that has an expected return of 2% and a standard deviation of 096. a. [2] if Eriich invests as percent of his wealth in the risky asset, what will his expected return be? What will the standard deviation be? h. [2] Solve for Erlich's \"budget constraint" Le. the expected return on his wealth as a function of the standard deviation (Hint: Combine the two quanties from partla\" c. [2] Eriich's utility function is no}, or) = minor\" 0.2 0.05%). What are his optimal values of rx and 0;? (Hint: Set this up as two equations in two unknowns, one ofthe equations is the 'budget constraint."]I. d. [2] what fraction of his wealth should Erlich invest in the safe asset

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