Question: Your client holds an optimal complete portfolio H that consists of a portfolio of risky assets (P) and T-Bills. The information below refers to these

Your client holds an optimal complete portfolio H that consists of a portfolio of risky assets (P) and T-Bills. The information below refers to these assets:

E(RP) 14.40%

P 12.90%

T-Bill rate 2.70%

Optimal risky share y* 75%

Composition of P

Risky Securities 100%

What is the equation of your clients capital allocation line?

Select one:

a. E(RH) = 0.25 + 0.91 H

b. E(RH) = 2.70 + 1.14 H

c. E(RH) = 2.70 + 0.91 H

d. E(RH) = 2.70 + 14.40 H

e. E(RH) = 12.90 + 2.70 H

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