Step $1$: You want to build a portfolio of one risky portfolio $($investment P$)$ with a risk$-$free investment. The risky portfollo will consist of a combination of a stock fund and a bond fund. I have provided $3$ asset combinations $($risky portfolios$)$ for you to choose from $($choose only $1).$ You are deciding on which combination of the two is most optimal from the list below. Step $2$: Once you decide on the optimal combination of the two risky assets, you will invest $70\%$ of your funds in this risky portfolio $($P$)$ and $30\%$ of your funds in a risk$-$free asset that has an expected return of $0\mathrm{.}25\%.$ Question: What are the Expected Return and Standard Deviation of this combined portfolio $($i$.$e$.$ the best risky portfolia combined with the risk$-$free asset$)?$ Chint: remember, when you have two assets and one is a risk$-$free asset, the SD of this RF asset is assumed to be $0($in theory$).$ Because of this, all the covariance terms drop out of the standard portfolio variance formula. Theretore. you calculate the portfolio standard deviation as a weight of the SD$\text{'}$s of each rather than using the full portfolio variance portfolio for $2-$risky 'assets $-$ in other words, you calculate the portfolio SD the same as the return$)$ E$(1)=5\mathrm{.}185\%$

Sdev $=8\mathrm{.}339\%$

E$($r$)=7\mathrm{.}145\%$

Sdev $=11\mathrm{.}223\%$

E$($r$)=3\mathrm{.}55\%$

Sdev $=7701\%$

E$($r$)=7\mathrm{.}145\%$

Sdev $=10\mathrm{.}15\%$

E$($n$)=3\mathrm{.}155\%$

Sdev $=3\mathrm{.}290\%$

Sdev $=6\mathrm{.}580\%$