Assume you have two risky assets A & B. Asset A has high risk and high expected return and B has lower risk and lower expected return. The correlation between these two assets is small (assumed to be zero). Your client is a risk-averse investor (A > 0). Show these two assets on a return vs. risk graph and draw a hypothetical efficient frontier connecting the two. Also draw the Capital Allocation Line and an indifference curve that shows a possible optimal complete portfolio. No values are needed on the x & y axis. Label the following:

a) Assets A & B

b) Opportunity set of risky assets

c) Optimal Risky Portfolio

d) Indifference Curve

e) CAL

f) Optimal Complete Portfolio (based on investors utility function)