Let Fidelity Magellan Mutual Fund provides expected rate of return of 15% and a standard deviation of 20%. The mutual fund is comprised of 25% in stock X, 30% in stock Y and 45% in stock Z. The T-bill rate is 5%.

Suppose an investor chooses to invest in Magellan fund a proportion such that the investors complete portfolio standard deviation will be 25%

1. What is the investment proportion of Magellan Fund in the complete portfolio?

2. What is the expected rate of return on the investors complete portfolio?
3. If the total investment in the complete portfolio is $5000, compute the dollar amount invested in each of the three stocks and the risk free asset.
4. What are the reward-to-variability ratios of the Magellan fund portfolio and the investors complete portfolio? Why are they same or different? Draw their relative positions on CAL and provide argument.