You have $25,000 invested in a risky, well diversified, portfolio, and $12,000 in a riskless certificate of deposit at the bank. You do a complete analysis of Johnson Control (JCI). You find that JCI has a positive alpha and want to add JCI to your portfolio. You have up to $2,000 to invest. What is the optimal investment decision you can make? Find the minimum variance portfolio between the risky portfolio and JCI, and invest using these proportions. The optimal investment decision would be to simply invest the new money into JCI. The optimal decision is to sell your current portfolio and invest everything into JCI. Find the optimal risky portfolio between the risky portfolio and JCI, and invest in JCI to respect these proportions. Use your degree of risk aversion and the data from JCI to do capital allocation between the risk free asset and JCI