Question
You form a complete portfolioC by investing 80% in S&P 500 and 20% in the risk-free security. S&P 500 has the expected return of 10%
You form a complete portfolioC by investing 80% in S&P 500 and 20% in the risk-free security. S&P 500 has the expected return of 10% and its standard deviation of 15% while the risk-free security has the expected return of 4% and its standard deviation of 0%.
a.Figure out the standard deviation of the complete portfolio C. (15points)
b.Figure out the slope of the Capital Allocation Line (CAL). (25points)
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Handbook Of Financial Intermediation And Banking
Authors: Anjan V. Thakor, Arnoud Boot
1st Edition
0444515585, 978-0444515582
