Given the data below, how should James, your client with $20,000 and a risk aversion coefficient of A=3, invest his money?

• The Optimal Risky Portfolio has 40% expected return and 30% standard deviation and consists of 70% equities and 30% corporate bonds.

• The Minimum Variance Portfolio has 25% expected return and 20% standard deviation and consists of 60% equities and 40% corporate bonds.

• Money can be invested risk free or borrowed at 4%.

		Equity: $23,000 Bonds: $15,333 T-Bill: borrow $18,333
		Equity: $21,000 Bonds: $14,000 T-Bill: borrow $15,000
		Equity: $18,667 Bonds: $8000 T-Bill: borrow $6667
		Equity: $19,703 Bonds: $8444 T-Bill: invest 8148