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Vanessa wants to construct a portfolio with her $40,000 lottery winnings. She is risk averse and wishes for her portfolio to have a standard deviation

Vanessa wants to construct a portfolio with her $40,000 lottery winnings. She is risk averse and wishes for her portfolio to have a standard deviation of only 7%. The markets expected return is 25% and it has a standard deviation of 10%. T-bills are currently yielding 2%.

How much should she invest in the market?

What is the expected return of her portfolio?

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