Question: Suppose the expected return and standard deviation for the S&P 500 are 12% and 20%, respectively, and the current T-Bill rate is 3%. These are

Suppose the expected return and standard deviation for the S&P 500 are 12% and 20%, respectively, and the current T-Bill rate is 3%. These are the only assets you may use to form portfolios for two different clients.

a) Harry desires a portfolio with an expected return of 10%. What fraction of his funds should you invest in the S&P 500?

b) Ron desires a return standard deviation no greater than 17%. What fraction of his funds should you invest in the S&P 500?

c) Compute Harrys beta.

d) Compute Rons Sharpe Ratio.

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