Problems to work through 1. You manage a portfolio of stocks with an expected rate of return of 12% and a standard deviation of 20%. The T-bill rate is 3%. Your client chooses to invest 70% of their portfolio in your fund and the rest in T-bills. a) What is the expected return and standard deviation of your client's complete portfolio? b) What is the Sharpe ratio of your portfolio and your client's complete portfolio? c) If you assessed your client's risk appetite (A) and it turned out to be 4, would you recommend a change to their capital allocation? . Annotate this picture E() A. B. G F CAL = Capital allocation line A = 15% C. D. E. y = .50 S = 8/22 y = 1.25 = 8% B = 7% E lo D = 22%