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Exercise 2 . Suppose you have a riskless security at 6 % and a market portfolio with a return of 1 8 % and a

Exercise 2.
Suppose you have a riskless security at 6% and a market portfolio with a return of 18% and a
standard deviation of 10%.
How should you go about investing your money so that your investment will have a risk level of
15%?
Using the Capital Market Line (CML),
a. Calculate the portfolio return.
b. How much to invest in the riskless security?
c. What will be the investor's investment strategy?
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