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You decide to build a portfolio with Google, Apple stock, and T-bills. You estimate that Google has an expected return of 8%, and Apple has

  1. You decide to build a portfolio with Google, Apple stock, and T-bills. You estimate that Google has an expected return of 8%, and Apple has an expected return of 12%, the risk-free rate on the T-bills is 5%. Google stock has a volatility of 20%, and Apple stock has a volatility of 20%. Assume Google and Apple stocks have a correlation of 0. Your risk-aversion parameter is 3. You have $10000 to invest.
    1. How much money should you invest in Apple?
    2. What is the Sharpe ratio of your overall portfolio?
    3. What is the Sharpe ratio of your overall portfolio if your risk-aversion parameter is 4?

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