You currently have $100,000 in cash and are trying to decide how to invest it over the next year. One choice you are considering is SPY, whose returns have a mean of 10% and a standard deviation of 20% based on your predictive model. You can also put your money in a bank account that is currently yielding 1% interest. (25 pts)

1. Plot the capital allocation line that you would face. Label all key points on the graph.
2. On the same graph, mark the complete portfolios when you invest 50%, and 150% in the stock market.
3. How much would you invest in each asset if your risk aversion parameter A was equal to 5?
4. On the same graph, draw the approximate locations of the optimal portfolios given your risk aversion parameter A equal to 5 from c.
5. Suppose now you want to add OEF to your portfolio. Clearly illustrate how to construct the capital allocation line under this scenario.