Two investors each have $25,000 of their own money available to invest. Investor A has formed a portfolio where she has invested $10,000 of her funds in the riskfree security and the remaining funds in the market portfolio. Investor B has formed a portfolio by borrowing $15,000 at the riskfree rate and investing all the available funds in the market portfolio. The riskfree rate is 4%, the expected return on the market portfolio is 12% and its standard deviation of return is 22%.

 

i)Calculate is the expected return of each investor's portfolio?

ii)Calculate the standard deviation of returns for each investor's portfolio

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