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(Please SHOW WORK) A portfolio manager is providing recommendations to her clients. Her research department has prepared the following information for her: Portfolio Forecasted Return

(Please SHOW WORK) A portfolio manager is providing recommendations to her clients. Her research department has prepared the following information for her:

Portfolio Forecasted Return std dev

Stock X 10% 8% Stock Y 12% 20% Risk-free 5% 0% (a) Which stock should an investor hold? Explain your answers.

(b) Draw the Capital Allocation Line of Stock X and Stock Y in one xy-coordinate system.

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