Suppose you are a fund manager, managing an active fund with an expected return of $14\%$ and a standard deviation of $20\%.$ The risk$-$free rate is $2\%.$

You are advising a risk averse client who has mean$-$variance preferences and would like to invest in a combination of the risk$-$free asset and your active fund. They currently have a passive portfolio with an expected return of $8\%$ and a standard deviation of $12\%.$ The sharpe ratios for the active fund and passive portfolio are $0\mathrm{.}6$ and $0\mathrm{.}5$ respectively. Could you answer this question in excel and explain how you did it: Draw the capital allocation line $($CAL$)$ of your active fund on an expected return$-$standard deviation diagram. Clearly indicate the position of your active fund and your client$$s current passive portfolio in the figure.