An investor chooses to invest 60% of a portfolio in a risky fund and 40% in a T-bill fund. The expected return of the risky portfolio is 17% and the standard deviation is 27%. The T-bill rate is 7%.

1. What is the expected return and the standard deviation of the investor?

2. What is the Sharpe ratio of the risky portfolio and the investors overall portfolio?

3. Suppose the investor decides to invest a proportion (y) of his total budget in the risky portfolio so that his overall portfolio will have an expected return of 10%.

1. What is the proportion that must be invested in T-bills?

2. What is the standard deviation of the rate of return on the investors portfolio?