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Suppose you are a financial planner putting together a portfolio for a kind of risk-loving person who is 32 years old. You have two risky

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Suppose you are a financial planner putting together a portfolio for a "kind of risk-loving" person who is 32 years old. You have two risky assets and one risk-free asset available for making portfolio choices 3 Ques... The annual historical returns, standard deviation and correlation of the risky assets are as below. For the risk-free asset consider annual returns of 0.025 Table 1. Means, Std and Correlation Asset 1 Asset 2 GeoMean 0.12 0.15 Standard Deviation 0.22 0.27 Correlation between Asset 1 and 2 0.65 Question 1. Draw (or graph) the EV-Frontier between the two risky assets. Question 2. Considering that you have those two risky assets, which combination of those would you use to combine with the risk-free asset? Please indicate that combination and write a paragraph with a justification. Question 3. After defining that combination, what proportion would you allocate between this combination of risky assets, and the risk-free asset? Why? (The proportion depends on the individual, so when making your choice explain the rationale for your choice)

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