1. You manage a risky portfolio that has an expected return of 9% and a standard deviation of returns of 12.5%. The T-bill rate is 3%.
   1. Your client wants to allocate her investment portfolio between your fund and T-bills to achieve an expected rate of return of 7%. What proportion of her portfolio should she allocate to the risky portfolio? What proportion to T-bills? What is the standard deviation of her portfolio?
   2. Another client wants to allocate his investment portfolio between your fund and T-bills in order to achieve the highest possible return subject to the constraint that the standard deviation of his portfolio is no more than 9%. What proportion of his portfolio should he allocate to the risky portfolio? How much to T-bills? What is the expected return of his portfolio?

Based on your answers above, which client is more risk averse