Question: Consider again the client in Problem 19 with A = 3.5. a. If he chose to invest in the passive portfolio, what proportion, y, would

Consider again the client in Problem 19 with A = 3.5.
a. If he chose to invest in the passive portfolio, what proportion, y, would he select?
b. Is the fee (percentage of the investment in your fund, deducted at the end of the year) that you can charge to make the client indifferent between your fund and the passive strategy affected by his capital allocation decision (i.e., his choice of y)?

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