Bobby wishes to hold a single risky asset in combination with the risk free rate.

(a) Without knowing any more information about Bobbys preferences, which risky asset should Bobby include in a portfolio with Rf? Explain why you chose that asset.

(b) After you reveal the name of the asset in 3(a) above, Bobby says to you, I want to hold this asset you just named, in combination with the risk free rate. I want my final portfolio to have an SD of 5%. What is the expected return on Bobbys final portfolio?

(c) Given your answer above, if Bobby said I have $100,000 to invest, calculate the exact dollar amounts that Bobby should invest in the asset you named, and in the risk free rate.