Question: please show how to solve using formulas in excel You are the financial adviser to three individuals, a Young person with high risk tolerance, a

please show how to solve using formulas in excel

You are the financial adviser to three individuals, a Young person with high risk tolerance, a Middle aged person with medium risk tolerance and an old person with low risk tolerance. Here are the current conditions: Risk free asset is earning 12 % per year. Risky asset (or market portfolio) has expected return of 30% per year and standard deviation of 40%. Using the mutual fund theorem or Separation theorem (see my lecture notes for chapter 5)

: a. Construct an appropriate portfolio (Mix of risky asset and risk free asset)for your young client and estimate the expected return and standard deviation of your young client for the coming year. (choosing 80% risky, 20% risk free)

b. Construct an appropriate portfolio for your middle aged client and estimate the expected return and standard deviation of your middle aged client.

c. Construct an appropriate portfolio for your old client and estimate the expected return and standard deviation of your old client. d. If your middle aged client requires a portfolio with a standard deviation of 30%, what is its expected rate of return?

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