Suppose a portfolio of risky stocks P is your optimal risky portfolio p. E(rp)=15%, and p=22%. The risk-free rate of return rf (T-bill rate) is 7%. You have $1,000 to invest and want 12% expected return for you investment. How should you combine the portfolio P and the risk-free asset?

Suppose you think the standard deviation of 13.75% is too risky, and want 10% standard deviation of return for your investment. What should be the allocation in this case? What is the expected return of this portfolio?