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Your client holds an optimal complete portfolio H that consists of a portfolio of risky assets (P) and T-Bills. The information below refers to these
Your client holds an optimal complete portfolio H that consists of a portfolio of risky assets (P) and T-Bills. The information below refers to these assets:
E(RP) 14.40%
P 12.90%
T-Bill rate 2.70%
Optimal risky share y* 75%
Composition of P
Risky Securities 100%
What is the equation of your clients capital allocation line?
Select one:
a. E(RH) = 0.25 + 0.91 H
b. E(RH) = 2.70 + 1.14 H
c. E(RH) = 2.70 + 0.91 H
d. E(RH) = 2.70 + 14.40 H
e. E(RH) = 12.90 + 2.70 H
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