What is the sharpe ratio of the final allocation strategy

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Wealth Management Solution for Your Clients The expected return of a risky portfolio is 8%; the standard deviation of risky investment is 23%. The T-Bill rate is 2%.

a) If your client’s Risk Aversion Metric is 3, how much of his/her total wealth should invest in risky investment that maximize his or her utility.

b) What are the expected return and risk of the final portfolio that you select for your client?

c) What is the Sharpe Ratio of the final allocation strategy?

d) Can you increase the Sharpe Ratio by changing the weights of risk-free and risky investment?

e) How do the expected return, risk of risky investment, and client’s risk attitude affect clients’ demand for risky investment?

Reference no: EM131514787

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