Mr & Mrs. Smith are analysts specializing in investments. The need to respond to the following problems :

[a] Mr. Bob, CFA, is an investment manager of a Japanese financial institution. He manages a JPX ETF fund with an expected risk premium of 7% and a standard deviation of 5%. The rate on Japanese Treasury bills is 2%. One of his clients decides to invest JPY 15,000,000 in the JPX ETF fund and JPY 5,000,000 in the Japanese T-bills fund. What are the expected return and standard deviation of return on Mr. Bob's client's portfolio?

[b] Mr. Chris, CFA, is a Japanese investor living in Tokyo. Most of his funds are invested in a portfolio with an annual risk premium of 0.07 and a variance of 0.0300. Suppose that the average Japanese market risk premium is 0.05, with a variance of 0.0350. What is the best guess of Mr. Chris capital allocation between the Nikkei 225 index and the Japanese T-Bills?  

[c] What are the strong points of the behavioral critique of the efficient market hypothesis? What are some problems with the critique? Explain!