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Risky Asset A B E(r ) 9% 5% (std dev) 20% 10% 0.15 *Rate on Treasure bills (risk-free rate of return) is 2% Given your
Risky Asset A B
E(r ) 9% 5%
(std dev) 20% 10%
0.15
*Rate on Treasure bills (risk-free rate of return) is 2%
Given your clients risk assessment survey, you feel a portfolio with moderate risk would be most appropriate. Therefore, you decide to recommend a portfolio with a standard deviation equal to 20%. Given the three financial assets above, whats the best possible expected return you can generate for your client given this level of risk?
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