You manage a risky portfolio with an expected rate

of return of 18% and a standard deviation of 28%. The T-bill rate is 8%.

Suppose your risky portfolio contains the following positions:

Stock A	25%
Stock B	32%
Stock C	43%

Suppose that your client decides to invest in your portfolio a proportion y of the total investment budget so that the overall portfolio will have an expected rate of return of 16%.

a. What is the proportion y?

b. What are your clients investment proportions in your three stocks and the T-bill fund?

c. What is the standard deviation of the rate of return on your clients portfolio?