Professional Assignment 1 - CLO 1, CLO 2, CLO 3, CLO 5 Analyze the concept of risk and return in investment analysis. Discuss the different types of risk, such as systematic risk and unsystematic risk, and their impact on investment decisions. Use historical data and real-world examples to illustrate the relationship between risk and return. Evaluate the role of risk tolerance and investment objectives in determining optimal capital allocation. Discuss how individual investors' risk preferences and goals influence their asset allocation decisions. Examine the factors that should be considered when aligning capital allocation with an investor's risk tolerance and objectives. Consider a risky portfolio. The end-of-year cash flow derived from the portfolio will be either $70,000 or $200,000 with equal probabilities of .5. The alternative risk-free investment in T-bills pays 2% per year. If you require a risk premium of 8%, how much will you be willing to pay for the portfolio? Suppose that the portfolio can be purchased for the amount you found in (a). What will be the expected rate of return on the portfolio? Now suppose that you require a risk premium of 12%. What price are you willing to pay? Comparing your answers to (a) and (c), what do you conclude about the relationship between the required risk premium on a portfolio and the price at which the portfolio will sell