What is the Sharpe ratio of your risky portfolio

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Question - Assume you have a risky portfolio with an 20% expected return and a 30% standard deviation. The risk free rate is 4%.

Now you decide to invest in your risky portfolio a proportion (y) of his total investment.

And the remaining is invested in the risk-free asset. You hope to have an overall portfolio return of 16%.

(a) What is the proportion y that you should invest?

(b) What is the Sharpe ratio of your risky portfolio?

Reference no: EM132945395

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