Question: 4. Use the information right below the probability table to answer the following questions parts: A passive investor decides to allocate 30% of her

4. Use the information right below the probability table to answer the following questions parts: A passive investor decides to allocate 30% of her funds to the risk-free asset and the rest to the market portfolio to form a combined portfolio, C. a. Does the CML apply to this investor? Why? Ans: Yes. (figure out why) b. If yes, use it to calculate the standard deviation and the required return and on portfolio, C. Ans: 4.20% and 6.20% c. Does the SML apply to this investor? Why? Ans: Yes. (figure out why)

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