What will be the standard deviation of her portfolio returns

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Question - You manage a risky portfolio with E(rP) = 12%, stdev.P=20%. The risk-free rate rf = 4%. A client wants to invest a fraction of her total investment budget in your fund and the balance in the risk-free asset. The client wants an expected return of 10%. What proportion of her budget should be invested in your fund and what proportion should be invested in the risk-free asset? What will be the standard deviation of her portfolio returns?

Reference no: EM132142138

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