Assume that you manage a risky portfolio with an expected rate of return of 17% and a standard deviation of 27%. The T-bill rate is 7%.
Your risky portfolio includes the following investments in the given proportions:
Stock A 27%
Stock B 33%
Stock C 40%
Your client decides to invest in your risky portfolio a proportion (y) of his total investment budget with the remainder in a T-bill money market fund so that his overall portfolio will have an expected rate of return of 15%.
a. What is the proportion y? (Round your answer to 1 decimal place.)
Proportion y
b. What are your client's investment proportions in your three stocks and the T-bill fund? (Round your
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