Question: Please all work must be done on paper, no spreadsheet software! Use the following information to answer Questions 1-10. Probability Equity returns 0.25 0.25 5%

Please all work must be done on paper, no spreadsheet software! Use the following information to answer Questions 1-10. Probability Equity returns 0.25 0.25 5% 3% 0.20 Debt returns -8% -4% 14% 28% 4% 6% 0.30 Risk-free rate Correlation, de 0.75% 0.3690 6. What is the expected return of the optimally risky portfolio? Round to the nearest 0.01% 7. What is the standard deviation of the optimally risky portfolio? Round to the nearest 0.01. 8. What is the optimal allocation of risk-free assets in the complete portfolio? Assume a risk aversion of 2. Round to the nearest 0.01%. 9.What is the optimal weight of the equity in the complete portfolio? Round to the nearest 0.01%. 10. What is the Sharpe ratio of the optimally risky portfolio? Round to the nearest 0.01

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