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  3. suppose that you have the following two opportunit

Suppose that you have the following two opportunities from which to construct a portfolio: 1)...

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Finance

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Suppose that you have the following two opportunities from which to construct a portfolio: 1) Risk-free asset earning 12% per year. II) Risky asset with expected return of 30% per year and standard deviation of 40%. a) If you construct a portfolio with a standard deviation of 30%, what is the expected rate of return? [2] b) It is known that the market portfolio yields an expected return of 21% with standard deviation of 20%. Is the portfolio in (a) efficient? Why? [3]

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