Exercise 1. Consider an investor with log utility deciding how much to invest in one risky asset and one risk free asset. The risky asset will have an excess return of y >0 with probability p, and an excess return e o the probability of bankruptcy? Exercise 2. There are many assets in an economy. Among them are two stocks, stock A and stock B. Suppose that the expected returns are 4% and 7% respectively. The standard deviations are 12% and 9% respectively. The correlation between the two is-1. 15- Suppose that there is a risk free asset with return 2%. How nuch would an investor buy of each asset? What would their return be? Risk? Sharpe ratio