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a 3. Your sister holds a portfolio consisting of a 50% allocation to a (risk-free) money market account that earns 2% per year and a
a 3. Your sister holds a portfolio consisting of a 50% allocation to a (risk-free) money market account that earns 2% per year and a 50% allocation to an ETF that tracks a broad stock index. Suppose you are informed that the risk premium for her portfolio is 6% per year and the standard deviation of the portfolio return equals 10% per year. She would like to alter her allocation to target a high expected return of 20% per year, but she is concerned about the level of risk she would be taking. Assist her by computing the new weights that will deliver a 20% expected return and determine the corresponding standard deviation of the portfolio return
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