You have $1000 to invest. The risk free rate is 6%. The market portfolio has expected...

 

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You have $1000 to invest. The risk free rate is 6%. The market portfolio has expected return of 15% and standard deviation of 20%. Part a. What is the mean and standard deviation of your investment if you invest $500 in the risk-free asset and $500 in the market portfolio? Part b. Your sister also has $1000 to invest, but she wants to borrow another $1000 in order to make investment of $2000 in the market portfolio M. What will be the mean and standard deviation of her portfolio's return? Part c. Which portfolio is better? Yours or your sister's? Amount to invest Risk-free rate, rf E(™M) OM Section a. Investment in risk-free Investment in market Expected portfolio return Portfolio standard deviation Section b. Investment in risk-free Investment in market Expected portfolio return Portfolio standard deviation Section c. $ $ LA GA $ $ 6969 CML WITH LEVERAGE 1,000 (1,000) $ 2,000 Write your response in here: 6% 15% 20% 500 500 Investment proportions Investment proportions You have $1000 to invest. The risk free rate is 6%. The market portfolio has expected return of 15% and standard deviation of 20%. Part a. What is the mean and standard deviation of your investment if you invest $500 in the risk-free asset and $500 in the market portfolio? Part b. Your sister also has $1000 to invest, but she wants to borrow another $1000 in order to make investment of $2000 in the market portfolio M. What will be the mean and standard deviation of her portfolio's return? Part c. Which portfolio is better? Yours or your sister's? Amount to invest Risk-free rate, rf E(™M) OM Section a. Investment in risk-free Investment in market Expected portfolio return Portfolio standard deviation Section b. Investment in risk-free Investment in market Expected portfolio return Portfolio standard deviation Section c. $ $ LA GA $ $ 6969 CML WITH LEVERAGE 1,000 (1,000) $ 2,000 Write your response in here: 6% 15% 20% 500 500 Investment proportions Investment proportions

Answer rating: 100% (QA)

Part a Your Investment You invest 500 in the riskfree asset and 500 in the market portfolio The mean expected return of your portfolio can be calculat... View the full answer