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You are an invesment manager and your client, Marge, has decided to trust you to manager her complete portfolio. You offer Marge a risky investment
You are an invesment manager and your client, Marge, has decided to trust you to manager her complete portfolio. You offer Marge a risky investment in your expertly crafted mutual fund as well as a risk free investment in Treasury bills. Your mutual fund's expected return is 16% and its standard deviation is 32%. The T-bill rate is 5%. Marge thinks it over and decides to invest 80% of her money in your mutual fund and 20% in T-bills. a. What is the expected return and standard deviation of Marge's complete portfolio? (Round your answers to 2 decimal places.) Expected return Standard deviation 13.8% per year 441% per year b. Suppose your risky mutual fund Includes the following investments in the given proportions: 23 Stock A Stock B Stock 3.4 38 What are the investment proportions of your client's complete portfolio, including the position in T-bills? (Round your answers to 1 decimal places.) Security Title Investment Proportions on no b. Suppose your risky mutual fund includes the following investments in the given proportions: Stock A Stock B Stock C 28% 34 38 What are the investment proportions of your client's complete portfolio, including the position in T-bills? (Round your answers to 1 decimal places.) Security T-Bills StockA Stock B Investment Proportions 20.01% 22 41% 2721% 30.4% Stock C c. What is the reward to variability ratio (ie., Sharpe Ratio) of your risky mutual fund and your client's overall portfolio? (Round your answers to 4 decimal places.) Reward-to-Volatility Ratio Risky portfolio Client's overall portfolio
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