Penny Francis inherited a $100,000 portfolio of investments from her grandparents when she turned 21 years of age. The portfolio is comprised of the following three investments:

a.Based on the current portfolio composition and the given expected rates of return, the expected rate of return for Penny's portfolio is nothing %. (Round to two decimal places.)

b.If Penny wants to increase her expected portfolio rate ofreturn,she could increase the allocated weight of the portfolio she has invested in stock(Fordand HarleyDavidson)and decrease her holdings of Treasury bills. If Penny moves all her money out of Treasury bills and splits it evenly between the twostocks,what will be her expected rate ofreturn?

c.If Penny does move money out of Treasury bills and into the two stocks she will reap a higher expected portfolioreturn,so why would anyone want to hold Treasury bills in theirportfolio?