A portfolio manager is providing recommendations to her clients. Her research department has prepared the following information for her:

(a) Which stock should an investor hold? Explain your answers.

(b) Draw the Capital Allocation Line of Stock X and Stock Y in one xy-coordinate system.

PLEASE INCLUDE EXPLANATION AND WALK THROUGH SO THAT I MAY LEARN FROM IT :) THANKS!

Portfolio Stock X Stock Y Risk-free Forecasted Return 10% 12% 5% std dev 8% 20% 0% Portfolio Stock X Stock Y Risk-free Forecasted Return 10% 12% 5% std dev 8% 20% 0%