You are evaluating two investment alternatives. One is a passive market portfolio with an expected return...

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You are evaluating two investment alternatives. One is a passivemarket portfolio with an expected return of 8% and a standarddeviation of 12%. The other is a fund that is actively managed byyour broker. This fund has an expected return of 11% and a standarddeviation of 14%. The risk-free rate is currently 4%. Answer thequestions below based on this information.
a. What is the slope of the Capital Market Line?
b. What is the slope of the Capital Allocation Line offered byyour broker's fund?
c. You invest $700 in a portfolio C, which is composed of thefund managed by your broker and the risk-free asset. How muchshould you invest in the fund so that the expected return ofportfolio C is 10%?
d. What is the standard deviation of portfolio C?

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a Expected return on market or passive market portfolio ERm 8 and Standard deviation of passive market portfolio m 12 Risk free rate Rf 4 Slope of Capital market line or CML ERm Rf m 8 4 12 4 12 03333 Slope of CML 03333 b Expected return on Brokers fund or actively See Answer

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You are evaluating two investment alternatives. One is a passivemarket portfolio with an expected return of 8% and a standarddeviation of 12%. The other is a fund that is actively managed byyour broker. This fund has an expected return of 11% and a standarddeviation of 14%. The risk-free rate is currently 4%. Answer thequestions below based on this information.a. What is the slope of the Capital Market Line?b. What is the slope of the Capital Allocation Line offered byyour broker's fund?c. You invest $700 in a portfolio C, which is composed of thefund managed by your broker and the risk-free asset. How muchshould you invest in the fund so that the expected return ofportfolio C is 10%?d. What is the standard deviation of portfolio C?