Suppose you are thinking of investing in a risky fund that has an expected rate of return of $15\%$ and

a standard deviation of $19\%.$ The T$-$bill rate is $5\%.$ You are thinking of investing $30\%$ of your portfolio

in the risky fund and $70\%$ in T$-$Bills.

a$.$ What is the expected return and standard deviation of your portfolio?

b$.$ What is the Sharpe Ratio $($S$)$

i$.$ of the risky fund?

ii$.$ of the overall portfolio?

c$.$ Draw the CAL of your portfolio on an expected return$/$standard deviation diagram. Clearly

label your diagram including the portfolio and the risky fund on the diagram.