Edgar has a coefficient of risk aversion of 1.9 and Fatima has a coefficient of risk aversion of 3.1. They can both invest in a risky stock with an expected return of 14% and a variance of 9%, or a risky bond with an expected return of 8% and a variance of 7%. The coefficient of correlation between the returns on these two assets is 0.6.

a. If Edgar had to put all his money into a single risky asset, which one would he choose?

b. If Fatima was trying to build the best possible risky portfolio, what investments would she make?

c. Would Edgar choose a different risky portfolio than Fatima? Why or why not? d. If Edgar could also invest in a riskless asset that returns 3.5%, what would be the composition of the best overall portfolio for him?