Solve the maximum expected return that fiona could achieve

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Problem 1: What is an efficient frontier? When the set of investment opportunities increases, will the efficient frontier be shifted to the left or to the right? Why?

Fiona's portfolio consists solely of an investment in CCM stock. CCM has an expected return of 6% and a volatility of 16%. The market portfolio has an expected return of 10% and a volatility of 20%. The risk-free rate is 4%. Assume that CAPM assumptions hold.

Problem 2: Assuming that Fiona wants to maintain the current risk of her portfolio, calculate the maximum expected return that Fiona could achieve by investing in the market portfolio and risk-free investment.

Reference no: EM132985759

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