Suppose The market has expected return 8, standar deviation 5. Two stocks have expected returns 15 and 10, estndar deviations 10 and 8. Their correlations with the market are 0.5 and 0.6. Assuming a single-factor model and a risk-free rate of 6. The tangent portfolio was w1 = and W2= For a portfolio on the investment line to have expected return of 12 we need top ut this proportion of our investment in the risk-free asset: Suppose The market has expected return 8, standar deviation 5. Two stocks have expected returns 15 and 10, estndar deviations 10 and 8. Their correlations with the market are 0.5 and 0.6. Assuming a single-factor model and a risk-free rate of 6. The tangent portfolio was w1 = and W2= For a portfolio on the investment line to have expected return of 12 we need top ut this proportion of our investment in the risk-free asset