Your investment portfolio consists of $15,000 invested in only one stocklong dashMicrosoft. Suppose the risk-free rate is 4%, Microsoft stock has an expected return of 14% and a volatility of 37%, and the market portfolio has an expected return of 8% and a volatility of 16%. Under the CAPM assumptions, a. What alternative investment has the lowest possible volatility while having the same expected return as Microsoft? What is the volatility of this investment? b. What investment has the highest possible expected return while having the same volatility as Microsoft? What is the expected return of this investment? Hint: Make sure to round all intermediate calculations to at least five decimal places.

a. What alternative investment has the lowest possible volatility while having the same expected return as Microsoft?

To create an alternative investment that has the lowest possible volatility while having the same expected return as Microsoft, we use the following strategy:

Sell:________	worth of Microsoft stock. (Round to the nearest dollar.)
Borrow: ______	at the risk-free rate. (Round to the nearest dollar.)
Buy: _________	worth of the market portfolio.(Round to the nearest dollar.)
Buy: _________	worth of the risk-free investment. (Round to the nearest dollar.)

This portfolio has a volatility of ________(Answer) (Round to two decimal places.)

b. What investment has the highest possible expected return while having the same volatility as Microsoft?

To create an alternative investment that has the highest possible expected return while having the same volatility as Microsoft, we use the following strategy:

Sell: ______	worth of Microsoft stock. (Round to the nearest dollar.)
Borrow:______	at the risk-free rate. (Round to the nearest dollar.)
Buy:________	worth of the market portfolio. (Round to the nearest dollar.)
Buy:_______	worth of the risk-free investment. (Round to the nearest dollar.)

The expected return of this investment will be _______ (Round to two decimal places.)

Enter your answer in each of the answer boxes. Total of 10 answers.