You are considering investing $1,000 in a complete portfolio. The complete portfolio is composed of Treasury bills that pay 5% and a risky portfolio, P, constructed with two risky securities, X and Y. The optimal weights of X and Y in P are 60% and 40%, respectively. X has an expected rate of return of 14%, and Y has an expected rate of return of 10%. The risky portfolio, P, has a standard deviation of 0.7. Assuming you decide to hold a complete portfolio that has an expected return of 8%.

A).

What is the expected return of your risky portfolio? (Round your answer to the first decimal place)

Continue from the previous problem, and use your answer from #4 for the following question: What is the weight you invested in Treasury bills? What is the weight you invested in the risky portfolio? hint: rc = wp*rp + wf*rf; and wf = 1-wp 0.08 = wp*rp + (1-wp) *0.05 (where rp is your answer from #4) (Round your answer to the second decimal place. Enter your answer as %. For example (this is just an example), 0.3627 = 36.27% and you should enter 36.27 as your answer. If you enter 0.36 the system will take 5 points off automatically).

B).

weight in risky portfolio = Blank 1. Fill in the blank % weight in Treasury bills = Blank 2. Fill in the blank %