In step 2, you make a Risky- and risk-free-asset portfolio P, which includes Risky-asset portfolio R created in step 1 and a risk-free asset .

The Risky- and risk-free-asset portfolio P' expected return is______

Select one:

1.

12%

2.

8%

3.

6%

4.

5.4%

5.

2%

In-class Manaba test 1 Stepl - The expected return and standard deviation of A are E(rK)=0.04, A=0.02 - The expected return and standard deviation of B are E(rB)=0.20, B=0.08 - Investment weights are wA=0.5 and wB=0.5 - The correlation between A and B is =0.1 In-class Manaba test 1 Step 2 Assuming that Rf=0.02 Investment weight wR=0.4 and wRf=0.6 Risk-free and risky assets Portfolio P expected return is 1, standard deviation is (