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?