1. Fenner Smith is contemplating dividing his portfolio between two assets, a risky asset that has an expected return of 30% and a standard deviation of 10%, and a safe asset that has an expected return of 10% and a standard deviation of 0%. (C) Solve the above two equations for the expected return on Mr. Smith's wealth as a function of the standard deviation he accepts. (d) Plot this "budget line on the graph. (e) If Mr. Smith's utility function is u(x,x) = min(x, 30 - 20x), then Mr. Smith's optimal value of az is ___, and his optimal value of 0x___ (Hint: You will need to solve two equations in two unknowns. One of the equations is the budget constraint.) (0) Plot Mr. Smith's optimal choice and an indifference curve through it in the graph. (g) What fraction of his wealth should Mr. Smith invest in the risky asset? 1. Fenner Smith is contemplating dividing his portfolio between two assets, a risky asset that has an expected return of 30% and a standard deviation of 10%, and a safe asset that has an expected return of 10% and a standard deviation of 0%. (C) Solve the above two equations for the expected return on Mr. Smith's wealth as a function of the standard deviation he accepts. (d) Plot this "budget line on the graph. (e) If Mr. Smith's utility function is u(x,x) = min(x, 30 - 20x), then Mr. Smith's optimal value of az is ___, and his optimal value of 0x___ (Hint: You will need to solve two equations in two unknowns. One of the equations is the budget constraint.) (0) Plot Mr. Smith's optimal choice and an indifference curve through it in the graph. (g) What fraction of his wealth should Mr. Smith invest in the risky asset