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

a.Based on the current portfolio composition and the given expected rates ofreturn,the expected rate of return forPenny'sportfolio isnothing%.(Roundto two decimalplaces.)

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?