1. Draw the efficient set of investments graph and carefully label the points of interest based on the questions below:
2. 1. Now label the efficient frontier and tell me why it is important.
   2. What the indifference curves and what role do indifference curves play into the selection of the optimal portfolio? Now include two sets of indifference curves on your graph to represent two investors with different levels of risk aversion.
   3. Now assume that investors can create new portfolios that combine the risk-free asset with a portfolio of risky assets. Now add the capital market line to your graph. Does the addition of the risk0free asset change your investors choices regarding portfolio selection? Why of why not explain/ Be sure to include the appropriate indifference curves (with labels) to bolster your response.