1) You manage a risky fund with an expected rate of return of 15% and a standard deviation of 20%....

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1) You manage a risky fund with an expected rate of return of 15% and a standard deviation of 20%. The risk-free rate is 5%. a. You client has $1000 to invest. She bo
ows another $500 at the risk-free rate and invests the $1500 in your fund. What is the expected return and standard deviation of your client’s portfolio? (2 points)
Solution: Weight of Own Funds = $1500/$1000 = 1.5
Weight of Risk-Free Funds = -$500/$100 = -0.5
Expected Return of Client’s Portfolio
= Weight of Own Funds* expected rate of...

Prince · Accepted Answer

1) You manage a risky fund with an expected rate of return of 15% and a standard deviation of 20%. The risk-free rate is 5%. a. You client has $1000 to invest. She borrows another $500 at the risk-free rate and invests the $1500 in your fund. What is the expected return and standard deviation of your client’s portfolio? (2 points)
Solution: Weight of Own Funds = $1500/$1000 = 1.5
                  Weight of Risk-Free Funds = -$500/$100 = -0.

1) You manage a risky fund with an expected rate of return of 15% and a standard deviation of 20%. The risk-free rate is 5%. a. You client has $1000 to invest. She borrows another $500 at the...

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