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Suppose you manage a risky portfolio with expected rate of return of 14% and standard deviation of 19%. The T-bill rate is 5.5%. Your client

Suppose you manage a risky portfolio with expected rate of return of 14% and standard deviation of 19%. The T-bill rate is 5.5%. Your client with risk aversion coefficient of 3.5 chooses to investment 25% in T-bill

Requirements:

  1. Draw the above information in a two dimensional graph.
  2. What is the expected value and standard deviation of the rate of return on his complete portfolio?
  3. Calculate the client's utility value based on req (1)
  4. Determine the optimal investment in risky portfolio that will attainable utility for this client.
  5. Calculate the expected return and standard deviation and utility based on re

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