Question 2 Assume that you are managing a risky portfolio with expected rate of return of 18% and standard deviation of 28%. The T-bill rate is 8%. Your client chooses to invest 70% of a portfolio in your fund and 30% in a T-bill money market fund. a) What is the expected value and standard deviation of the rate of return on his portfolio? [8 marks) b) Suppose that your risky portfolio includes the following investments in the given proportions: Stock A 25% Stock B 32% Stock C 43% What are the investment proportions of your client's overall portfolio including the position in T-bills? [7 marks] c) What is the reward-to-volatility ratio of your risky portfolio? Calculate also this ratio for your client? [6 marks] d) Draw the CAL (capital allocation line) of your portfolio on an expected return-standard deviation diagram. Show the position of your client on your fund's CAL. [7 marks] e) Suppose that your client decides to invest in your portfolio a proportion y of the total investment budget so that the overall portfolio will have an expected rate of return of 16%. What is the proportion y? (5.33 marks)