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Answers: expected return of new portfolio = 10.6% standard deviation of returns on new portfolio = 20% The answers are provided but I don't know

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Answers: expected return of new portfolio = 10.6% standard deviation of returns on new portfolio = 20%

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10. Assume you have all your wealth (a million dollars) invested in the Vanguard 500 index fund, and that you expect to earn an annual return of 12%, with a stan- dard deviation in returns of 25%. Since you have become more risk averse, you decide to shift $ 200,000 from the Vanguard 500 index fund to treasury bills. The T-bill rate is 5%. Estimate the expected return and standard devia- tion of your new portfolio

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