Question: Item Expected Return Standard Deviation Fund 1 0.1 0.2 Fund 2 0.3 0.6 Treasury bill 0.05 1) Determine the formula for the CAL supported by

Item Expected Return Standard Deviation
Fund 1 0.1 0.2
Fund 2 0.3 0.6
Treasury bill 0.05

1) Determine the formula for the CAL supported by Treasury bills and portfolio P (show the intercept and slope).

2) How much will an investor with A = 5 invest in funds 1 and 2 and the Treasury bills?

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