Capital market line with different lending and borrowing rates:

Investors risk-free rate is 5%. Return on risky portfolio is 12%.

He invests $20,000 in risk-free asset and $30,000 in the risky portfolio.

(a) Draw the capital market line and show the approximate point where the indifference curve of the investor is tangent to the Capital Market Line (CML).

(b) Compute the expected return of the investors portfolio comprising risk-free asset and risky portfolio.