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Suppose that you manage a portfolio of risky assets with a standard deviation of 25%...

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Finance

Suppose that you manage a portfolio of risky assets with a standard deviation of 25% and an expected return of 19%. Your portfolio consists of the following investments:

Type Weight
Stock A 20%
Stock B 24%
Stock C 14%
Stock D 42%

The Treasury bill rate is 7%. An investor wants to invest a proportion of their investment budget in the T-bill and the remaining proportion in your fund.

1. What proportion of the investor's money should be invested in your fund of risky assets in order to achieve an overall expected return of 12%?

2. What proportion of the investor's complete portfolio (including your fund of risky assets and the T-Bill) will be invested in stock B?

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