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I. Suppose that you have $1 million and the following two opportunities from which to...

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Finance

I. Suppose that you have $1 million and the following two opportunities from which to construct a portfolio: a. Risk-free asset earning 6% per year. b. Risky asset with expected return of 20% per year and standard deviation of 30%. If you construct a portfolio with a standard deviation of 25%, what is its expected rate of return? II. Suppose you have a project that has a 80% chance of doubling your investment in a year and a 20% chance of halving your investment in a year. What is the standard deviation of the rate of return on this investment?

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