Expected Return of Debt= 2.35%

Expected Return of Equity= 10.45%

Expected Standard Dev. of Debt= 3.84%

Expected Standard Dev. of Equity= 13.69%

5. (1.25 points) What is the optimal weight of the debt in the risky portfolio? Round to the nearest 0.01%

Use the following information to answer Questions 1-10. Debt returns 4% obability 0125 0.25 0:20 0.30 Equity returns -8% 5% 14% 28% 0.75% Risk-free rate Correlation, pde 0.3690