Question
Assume that you manage a risky portfolio with an expected rate of return of 15% and a standard deviation of 37%. The T-bill rate is
Assume that you manage a risky portfolio with an expected rate of return of 15% and a standard deviation of 37%. The T-bill rate is 5%. Your risky portfolio includes the following investments in the given proportions: Stock A 21 % Stock B 30 Stock C 49 Your client decides to invest in your risky portfolio a proportion (y) of his total investment budget with the remainder in a T-bill money market fund so that his overall portfolio will have an expected rate of return of 14%. a. What is the proportion y? (Round your answer to 1 decimal places.) b. What are your client's investment proportions in your three stocks and in T-bills? (Round your intermediate calculations and final answers to 1 decimal places.) c. What is the standard deviation of the rate of return on your client's portfolio? (Round your intermediate calculations and final answer to 2 decimal places.)
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