Question
Given your understanding of the capital market theory and the CML, consider an investor is trying to have an investment portfolio consists of the risk
Given your understanding of the capital market theory and the CML, consider an investor is trying to have an investment portfolio consists of the risk free asset and the market index. The portfolio has an expected return of 11% and the RFR is 4%. By considering the market standard deviation (m) as 15%. Then, Workout the following requirements. Show your detailed work for all requirements
1. What would be the slop of the CML
2. If the investor is trying to have a portfolio with standard deviation (p) of 7%, what would be the investors expected return in this case
3. What would be the portfolio weights (Wrf and Wrm) that would result a standard deviation (p) of 7%
4. If the investor is willing to have a portfolio with expected return [E(rp)] of 10%, what would be the investors portfolio standard deviation in this case
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