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The risk free rate is 4 % . The risky portfolio has an expected return of 1 5 % and a return volatility of 2
The risk free rate is The risky portfolio has an expected return of and a return volatility of Investors can create complete portfolios out of these two assets. Answer the following questions: A If an investor wants his complete portfolio to have an expected return of what is his capital allocation to the risky portfolio?
B If the investor has $ to invest, how does he invest this money to achieve such a complete portfolio?
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