Question 1 :

Your client holds 125% of her wealth in an index fund that tracks the S&P 500, which has expected return & risk of 11% & 21% respectively. The risk-free rate = 3.2%. What is the client's risk aversion?

Question 2 :

As stated in Problem #1 above, the client holds 125% of her wealth in the S&P 500 index fund. Explain how that can be accomplished. What is the client's allocation to T-Bills?