Question: Suppose the same client in the previous problem decides to invest in your risky portfolio a proportion (y) of his total investment budget so that

Suppose the same client in the previous problem decides to invest in your risky portfolio a proportion

(y) of his total investment budget so that his overall portfolio will have an expected rate of return of 11%.

(LO 5-3)

a. What is the proportion y?

b. What are your client’s investment proportions in your three stocks and the T-bill fund?

c. What is the standard deviation of the rate of return on your client’s portfolio?

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