Assume that you manage a risky portfolio with an expected rate of return of .20 and a standard deviation of 0.30. The T-bill rate is 0.06. Your client chooses to invest 0.60 of a portfolio in your portfolio and the balance in T-bills.

1. What is the expected return and standard deviation of your client's portfolio?

b. Suppose your portfolio includes the following investments in the given proportions: share X - 20%, share Y 40%, and share Z 40%.

What are the investment proportions of each stock in your client's overall portfolio, including the position in T-bills?

3. What is the Sharpe ratio (S) of your risky portfolio and your client's overall portfolio? Interpret the Sharpe ratios.