Your client would like to invest $15,000 in both the risk-free asset with return of rf = 1% and the risky portfolio with expected return of m = 8% and standard deviation of m = 25%. Her utility function is U(,)=2, where her risk aversion is 1.5.

a.How much should you invest in the risky portfolio so that she can receive the greatest utility?

b. What is the expected return of this optimal portfolio? c. What is the standard deviation of the returns of this optimal portfolio?

d. Suppose that your risky portfolio consists of 70% Stock A and 30% Stock B. What are the investment proportions of your clients overall portfolio in Stock A, B, and risk-free asset?