1. Suppose you manage a risky portfolio with an expected rate of return of 10% and a standard deviation of 20%. The T-bill rate is 2%. Also, suppose your risky portfolio includes the following assets in the given proportions:

   Stock A	10%
   Stock B	40%
   Stock C	20%
   Stock D	30%

   Suppose your client comes to you and asks you to help her create a portfolio with expected return of 20%.

   1. What fraction (y) will she need to invest in your risky portfolio to obtain this expected return?

   2. What are the investment proportions of the complete portfolio?

   y_{T bill} = ?

   yA= ?

   yB = ?

   yC = ?

   yD = ?

   3. Explain how you will allocate your assets based on the weights above ?

   4. What is the standard deviation of the rate of return on your clients portfolio?

   _{P =}

   5. What is the Sharpe ratio of your clients portfolio?

20 points