Identify how mr moroley will split his investment

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Reference no: EM131314808

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Mr. Moroley has just finished reading a textbook about portfolio theory and he is keen to put his new-found knowledge into action with respect to savings of £1000 he wishes to invest. He has identified the efficient frontier for portfolios of risky assets according to the following table.

Portfolio	Expected return (%)	Standard deviation (%)
A	4	5
B	6	4
C	8	5
D	10	8
E	10.6	11
F	11	14

He has also estimated that the redemption yield on short-dated Treasury bills is 7 per cent and has identified the shape of a typical utility curve given his own attitude towards risk. Points that plot on this utility curve are as follows.

Expected return (%)	Standard deviation (%)
8.8	1
9	3
9.5	5
10.2	6
11.2	7

Using this information, construct an appropriate diagram that enables you to identify how Mr. Moroley will split his investment between Treasury bills and the market portfolio.

Reference no: EM131314808

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