Assume that the CAPM assumptions hold. Don Lewis's portfolio currently consists of $100,000 worth of stocks in Tiger King Inc. and nothing else. Suppose that Tiger King has an expected return of 14% and a volatility of 23%. The market portfolio has an expected return of 12% and a volatility of 16%. The risk-free rate is 5%.

a) Given his risk tolerance, is Don currently maximizing his expected return?

b) Assume that Don cannot tolerate a higher portfolio volatility than his current investments. Construct an alternative investment strategy that would maximize Don's expected return given his risk tolerance. What is the expected return of the alternative portfolio?

c. briefly explain the difference between the Security Market Line (SML) and the Capital Market Line (CML).