A friend asks your advice about her investments. She holds in her brokerage account $20,000 worth...

  

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A friend asks your advice about her investments. She holds in her brokerage account $20,000 worth of the Blackrock mutual fund and $5,000 in risk-free bonds. She asks you whether she should re-allocate her assets. You are analyzing the returns of the Blackrock fund and you compare them with the Vanguard index fund. You expect the Blackrock fund to have an expected return of 13% and a standard deviation of 30%. The Vanguard fund has an expected return of 10% and a standard deviation of 20%. Risk-free bonds currently yield 2%. Assume that borrowing and lending rates differ. In particular, the borrowing rate equals 8% and the lending rate equals 2%. What is the expected return and standard deviation of your friend's current portfolio? A friend asks your advice about her investments. She holds in her brokerage account $20,000 worth of the Blackrock mutual fund and $5,000 in risk-free bonds. She asks you whether she should re-allocate her assets. You are analyzing the returns of the Blackrock fund and you compare them with the Vanguard index fund. You expect the Blackrock fund to have an expected return of 13% and a standard deviation of 30%. The Vanguard fund has an expected return of 10% and a standard deviation of 20%. Risk-free bonds currently yield 2%. Assume that borrowing and lending rates differ. In particular, the borrowing rate equals 8% and the lending rate equals 2%. What is the expected return and standard deviation of your friend's current portfolio?