To get the full marks of this question, you need to specify the dollar amount that you invest in the new portfolios in (i) and (ii)
1.
Let w be the weight invested in new portfolio and 1-w be the weight
in risk free rate
w*12%=8%
=>w=8%/12%=0.666666667
Expected return=0.666666667*20%+(1-0.666666667)*5%=15.0000%
This has higher expected return
Amount in new portfolio=0.666666667*100000=66666.6667
Amount in risk free rate=100000-66666.6667=33333.3333
2.
Let w be the weight invested in new portfolio and 1-w be the weight
in risk free rate
w*20%+(1-w)*5%=12%
=>w=(12%-5%)/(20%-5%)=0.466666667
Volatility=Standard deviation=0.466666667*12%=5.6000%
This has lower volatility
Amount in new portfolio=0.466666667*100000=46666.6667
Amount in risk free rate=100000-46666.6667=53333.3333
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