Construct a better investment portfolio

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Your friend James gladly told you that he invested $1000 in a technology company with an expected return of 30% and a standard deviation of 30%. Assume that is his total portfolio. Currently, the market portfolio has an expected return of 10% and a standard deviation of 5%. The risk-free rate of return is 2%. Assume the CAPM holds. Can you help James construct a better investment portfolio? Explain carefully with supporting calculations.

Reference no: EM133076029

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