Penny Francis inherited a $200,000 portfolio of investments for her grandparents when she turned 21 years of age. The portfolio is comprised of treasury bills and stuck in Ford and Harley Davidson.

a. Based on the current portfolio composition and the expected rate of return what is the expected rate of return for Penny's portfolio?

b. If Penny wants to increase her expected portfolio rate of return she can increase the allocated weight of the portfolio she has invested in stock and decreased her holdings of treasury bills. If Penny moves all of her money out of treasury bills and split it evenly between two stocks what will be her expected rate of return.

c. If Penny does move money out of treasury bills and into the two stocks she will re-up a higher expected portfolio return so why would anyone want to hold treasury bills in their portfolio?

..) Data Table $ Value Treasury bills Ford (F) Harley Davidson (HOG) Expected Return 3.8% 6.2% 11.8% 73,000 65,000 62,000 Print Done