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A customer relationship manager in Commonwealth Bank obtained the following information in the bank database regarding 2 of his clients: Client X Client z Portfolio
A customer relationship manager in Commonwealth Bank obtained the following information in the bank database regarding 2 of his clients: Client X Client z Portfolio Risk Premium 4.40% Portfolio Standard Deviation 12.10% Risk Aversion Level 1.0 Commonwealth Bank always offers the following portfolio to all clients as such portfolio can optimize the reward-to-volatility ratio among all different combinations of stock A and stock B: Expected Return Weight Stock A 12% 150% Stock B 6% -50% The portfolio offered to all clients has a risk premium of 8%. The relationship manager will meet with Client Z next week to review the client portfolio composition. What is the risk premium, standard deviation, and the Sharpe ratio the relationship manager should inform to Client Z regarding the portfolio composition
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