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Question #1: Asset Allocation [20Points]Supposethat aportfolio consisting of risky stocks has an expected return of...

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Accounting

Question #1: Asset Allocation [20Points]Supposethat aportfolio consisting of risky stocks has an expected return of E(rp) = 0.196with a standard deviation (p) = 0.129. Suppose that the risk-free asset (treasury bills)have an expected return ofrf= 0.035. Suppose that y isthe proportion of the overall portfolio that isinvested in the risky asset.(a) Calculate the expected return of the overall (complete) portfolio that has a mix of the risky asset and the risk-free asset, E(rc). [Hint: Your answer will be a function of y] [4 Points]

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