Statistic	Security 1	Security 2
Mean	20%	8%
Std. dev.	36%	12%
AB	-0.23

The tangency portfolio weight for Security 1 is 25% and the weight for Security 2 is 75%. The minimum variance portfolio weights are 15% and 85%, respectively for Security 1 and Security 2. The T-bill return is 2% and has a 0% standard deviation. Using the above statistics, what is the standard deviation of a portfolio with 50% invested in the best portfolio of risky assets and 50% invested in the T-bill? Enter your answer as a percent expression rounded to 2 decimal places. For example, if you calculate 0.12345, enter 12.35.

QUESTION 3

1. Which one of the following best describes why the tangency portfolio is called the "tangency" portfolio?

   		The tangency portfolio is associated with the highest Sharpe ratio.
   		The tangency portfolio has the lowest standard deviation in an investment opportunity set.
   		The tangency portfolio has the highest expected return in an investment opportunity set.
   		The tangency portfolio touches is the portfolio where the capital allocation line is just tangent to the investment opportunity set.
   		The tangency portfolio touches is the portfolio where the minimum variance portfolio is just tangent to the investment opportunity set.
   		The tangency portfolio is associated with the lowest capital allocation line.
   		None of the above.

QUESTION 4

1. The capital allocation line contains different combinations of the (Sharpe ratio/ minimum variance portfolio/ riskless asset/ investment opportunity set/ tangency portfolio/ risk preference) and (Sharpe ratio/ minimum variance portfolio/ riskless asset/ investment opportunity set/ tangency portfolio/ risk preference) available to the investor.