You consider investing in two mutual funds with the following parameters: Beta Standard Deviation Fund 1 0.75 0.18 Fund 2 1.25 0.4 The funds are valued in a market where investors can borrow and lend, using T-bills, at the risk free rate of 2% and require a risk premium above this risk free rate of 8% for holding the market portfolio. Suppose you are allowed to trade in only one of the two funds, and are allowed to combine it with a borrowing or lending position. 2.a Which fund do you prefer? 2.b What is the lowest risk portfolio that gives you an ex ed return of 14.6% What is its standard deviation? Construct this portfolio using one of the funds and T-bills. Which fund do you use? 2.c Suppose you can invest at the risk free rate of 2% but you can only borrow at a much higher rate of 6%. What is the lowest risk portfolio with an expected return of 11.5%? Which fund do you use to achieve this. You consider investing in two mutual funds with the following parameters: Beta Standard Deviation Fund 1 0.75 0.18 Fund 2 1.25 0.4 The funds are valued in a market where investors can borrow and lend, using T-bills, at the risk free rate of 2% and require a risk premium above this risk free rate of 8% for holding the market portfolio. Suppose you are allowed to trade in only one of the two funds, and are allowed to combine it with a borrowing or lending position. 2.a Which fund do you prefer? 2.b What is the lowest risk portfolio that gives you an ex ed return of 14.6% What is its standard deviation? Construct this portfolio using one of the funds and T-bills. Which fund do you use? 2.c Suppose you can invest at the risk free rate of 2% but you can only borrow at a much higher rate of 6%. What is the lowest risk portfolio with an expected return of 11.5%? Which fund do you use to achieve this