Your uncle calls and asks for your investment advice. Currently, he has $100,000 invested in a risky portfolio. This portfolio has an expected return of 10.5% and a volatility of 8%. Suppose the risk-free rate is 5% and the market portfolio has an expected return of 18.5% and a volatility of 13%. To maximize your uncle’s expected return without increasing his volatility, what investment strategy would you recommend? If your uncle prefers to keep his expected return the same, but minimize the risk, which investment strategy would you recommend?

Answer rating: 100% (QA)

To maximize your uncles expected return without increasing his portfolios volatility you should reco... View the full answer