You manage an equity fund with an expected risk premium of 0.12 and an expected standard deviation of 0.14. The rate on Treasury bills is 0.08, and is equal to the borrowing rate. Your client chooses to borrow $20,000 at the risk free rate and invest $120,000 of her portfolio in your equity fund.

1.What is the investment proportion, y?

2.What is the expected return on the completed portfolio?

3.What is the standard deviation of rate of return on the complete portfolio?

4.What is the reward-to volatility ratio of the complete portfolio?