Question 1. Jason has a coefficient of risk aversion of 3.8. There are three assets he can invest in: A risky stock with an expected return of 19% and a standard deviation of 0.09, a risky bond with an expected return of 11% and a standard deviation of 0.032, and a riskless bond with an expected return of 2.6%. The coefficient of correlation between the returns on the risky stock and the risky bond is 0.25.

1a. What would be the best possible mix of assets for the risky portion of Jasons portfolio?

1b. What percentage of Jasons assets should he put in the optimal risky portfolio? What percentage of his assets should he put in the riskless asset?