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Identify the labels for axis x and axis y

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The optimal risky portfolio (P) provides expected return of 12% pa with 20% standard deviation. The risk free rate of return (rf) is 3% pa. Based on this information Robert draws the following Capital Allocation Line (CAL) to identify his complete investment portfolio. Robert expects to earn 10.2% pa return from his investments.

-Identify the labels for Axis X and Axis Y in the Chart above.

-Among the portfolios represented by the points A, B, C and D on the graph - identify Robert's complete portfolio. Justify your answer.

-Based on Robert's return expectation, what proportion of his wealth should be invested in the risk-free asset?

Reference no: EM133073774

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