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**Please show how you got all calculated numbers Yon have the following information on two mutual funds A and D: E(rA) = 14% and sigma
**Please show how you got all calculated numbers
Yon have the following information on two mutual funds A and D: E(rA) = 14% and sigma A = 25% E(rB) = 10% and sigma B = 20% The risk-free rate of return (T-bill rate) available in the market is 4%. 3.1 Suppose you want to form a portfolio of T-bills and mutual funds. Further, suppose you can invest either in A or D but not in both. Which of the two funds would you select as part of your portfolio? Explain with quantitative justification. 3.2 Given the choice of funds in 3.1, how would you allocate your capital between T-bills and the chosen fund if your goal is to have an expected return of 8%? Illustrate your portfolio position by drawing a Capital Allocation Line. Be sure to label the axes, and locate the risk-free asset. A, D, and your portfolio clearly on the graphStep by Step Solution
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