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Investment Management Inc. (IMI) uses the capital market line to make asset allocation recommendations. IMI derives the following forecasts: Expected return on the market portfolio:
Investment Management Inc. (IMI) uses the capital market line to make asset allocation recommendations. IMI derives the following forecasts: Expected return on the market portfolio: 17%. Standard deviation on the market portfolio: 29%. Risk-free rate: 4%. Samuel Johnson seeks IMI's advice for a portfolio asset allocation. Johnson informs IMI that he wants the standard deviation of the portfolio to equal half of the standard deviation for the market portfolio. Using the capital market line, what expected return (expressed as a percentage with two decimals) can IMI provide subject to Johnson's risk constraint? Important: Express your answer as a percentage with two decimals. That is, if your answer is 0.0547 then enter 5.47
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