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V BN ce of earning a investment 12.5 pts. por 7 10 pts. Your investment has a 20% chance of earning a 30% rate of return, a 50% chance of e 16% rate of return, and a 30% chance of losing 5%. What is your expected return on this invest ANSWER: SOLUTION: 8. 5 pts. If you require a real growth in the purchasing power of your investment of 970, and you expect th rate of inflation over the next year to be 4%, what is the lowest nominal return that you would be satisfied with? ANSWER: SOLUTION: 9. 5 pts. (fill in the blanks) You invest $1.000 in a complete portfolio. The complete portfolio is composed of a risky asset with an expected rate of return of 16% and a standard deviation of 20% and a Treasury bill with a rate of return of 4% of your complete portfolio should be invested in the risky portfolio if you want your complete portfolio to have a standard deviation of 8%. SOLUTION: 10. 10 pts. (fill in the blanks) You invest $1,000 in a complete portfolio. The complete portfolio is composed of a risky asset with an expected rate of return of 15% and a standard deviation of 20% and a Treasury bill with a rate of return of 4%. A portfolio that has an expected value in 1 year of $1,100 could be formed if you SOLUTION: 11. 10 pts. (fill in the blanks) The return on the risky portfolio is 15%. The risk-free rate, as well as the investor's borrowing rate, is 8%. The standard deviation of return on the risky portfolio is 20%. If the standard deviation on the complete portfolio is 25%, the expected return on the complete portfolio is SOLUTION