Consider the following information about a risky portfolio that you manage and a risk$-$free asset: E$($rP$)=11\%,$sigma$*$P$=12\%,$rf$=2\%.$

Required:

$1.$Your client wants to invest a proportion of her total investment budget in your risky fund to provide an expected rate of return on her overall or complete portfolio equal to $8\%.$ What proportion should she invest in the risky portfolio, P$,$ and what proportion in the risk$-$free asset?

$2.$

What will be the standard deviation of the rate of return on her portfolio?

$3.$

Another client wants the highest return possible subject to the constraint that you limit his standard deviation to be no more than $17\%.$ Which client is more risk averse?