YAPs Foundation Onious Urayai is a consultant to the board of directors of the RSA-based YAPs Foundation. The board asks Urayai to recommend an asset allocation for YAPs. The bord of directors requires Urayai to use the return approach that accounts for compounding effect Urayai reviews key objectives of the YAPs investment policy statement shown in below: Return objective: - Real required annual rate of return-on-investment portfolio excluding management fees is 5%. - Maintain the purchasing power of the portfolio. Risk objectives: - Diversify the portfolio consistent with prudent investment practices. - Minimize portfolio risk while achieving the return objective. - Leverage is not allowed. For the strategic asset allocation analysis, Urayai has generated the corner portfolios shown in Exhibit 3. Exhibit 3 Corner Portfolios (Risk-free Rate =2%; Inflation 3% ) Management fees: 0.7% c) Calculate the nominal required rate of return and determine the percentage that would be invested in each of the asset class based on the most appropriate strategic asset allocation. (12) d) Assuming no constraint against leverage, determine the weights that should be invested in the risk-free asset and the tangency portfolio to achieve an expected return of 8.5%. (6)