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Please answer within 2 hours. I will make sure to like it. Ms. Sachi Bhansali, the co-founder of an e-commerce start-up exited the firm in

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Please answer within 2 hours. I will make sure to like it.

Ms. Sachi Bhansali, the co-founder of an e-commerce start-up exited the firm in May 2019. She received around $1 billion from the shares and exit remuneration. She went on to set up a $1 billion investment fund with that money. Suppose Ms. Bhansali is considering investing in two firms: a clean technology company and a grocery delivery firm. Assume you are an analyst tracking investment in the start-up ecosystem and based on your estimates the one year expected return and risk of investing in each of the firms are given below: E(r_cleantech)=15%, SD_cleantech=15%; E(r_grocery)=12%, SD_grocery=9%, corr=1/3. (a) Find the risk and return of minimum variance portfolio, optimal risky portfolio and the complete portfolio allocation for Ms. Bhansali if the current T-bill rate is 6% and her index of risk aversion is 10. Clearly write down the objective function and constraints wherever necessary. (b) Suppose now the T-Bill rate reduces to 4% p.a., but other factors do not change. Graphically explain what will happen to complete portfolio allocation with the help of CAL and indifference curve. Neatly label the axes and explain in few sentences. Ms. Sachi Bhansali, the co-founder of an e-commerce start-up exited the firm in May 2019. She received around $1 billion from the shares and exit remuneration. She went on to set up a $1 billion investment fund with that money. Suppose Ms. Bhansali is considering investing in two firms: a clean technology company and a grocery delivery firm. Assume you are an analyst tracking investment in the start-up ecosystem and based on your estimates the one year expected return and risk of investing in each of the firms are given below: E(r_cleantech)=15%, SD_cleantech=15%; E(r_grocery)=12%, SD_grocery=9%, corr=1/3. (a) Find the risk and return of minimum variance portfolio, optimal risky portfolio and the complete portfolio allocation for Ms. Bhansali if the current T-bill rate is 6% and her index of risk aversion is 10. Clearly write down the objective function and constraints wherever necessary. (b) Suppose now the T-Bill rate reduces to 4% p.a., but other factors do not change. Graphically explain what will happen to complete portfolio allocation with the help of CAL and indifference curve. Neatly label the axes and explain in few sentences

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