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You can invest in three assets (or a portfolio thereof): Risk-free asset : Expected rate of return of 3% Market portfolio : The expected return

You can invest in three assets (or a portfolio thereof):

  • Risk-free asset: Expected rate of return of 3%
  • Market portfolio: The expected return of 10% with a standard deviation of 15%
  • The stock of Gabl: The expected return of 15% with a standard deviation of 30%.

You want to earn an expected return of 15%. What should you do?

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