Question: Based on 1 9 2 6 2 0 1 5 data, suppose that expectations for the U . S . equity market and the T

Based on 19262015 data, suppose that expectations for the U.S. equity market and the T-bill rate are as follows, respectively: 11.77 percent and 3.47 percent. Standard deviation of the U.S. equity market is 20.59 percent. Based on your personnel risk aversion measure, calculate your optimal allocation of risky and risk-free assets. In other words, how much you would invest into T-bill and how much into the U.S. equity market?

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