Question: Now consider only the return objective determined in (IV) above (i.e. expected return determined for the complete portfolio being 9%). Using the average returns calculated

Now consider only the return objective determined in (IV) above (i.e. expected return determined for the complete portfolio being 9%). Using the average returns calculated in (II) being the risky asset with 0.080279 or 8.0279% returns and (III) being the risk free asset with -0.230497 or -23.0497% returns as expected returns of respective assets, determine the proportions of wealth that your family member should invest in risk-free asset and risky portfolio to form a complete portfolio that generates an expected return of 9%. (Use your BFF2140 knowledge and basic math knowledge here.) Using the Capital Allocation Line (CAL) equation E(rc )=rf+y[E(rp )rf], calculate the expected return of this portfolio and show that it is equal to the expected return you determined for your family member in IV above. Assume that the standard deviation of risk- free asset is zero and standard deviation of the risky asset is 0.108398.

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