There are 2 investment -- a risk-free security that returns 2% and a risky asset that has expected return of 10% and standard deviation of 18%.
1). What are the weights of the complete portfolio that has an 8% expected return?
2). What is the standard deviation of that portfolio?
3). If the portfolio is valued at $100,000, how much do you invest in the risk-free security and how much do you invest in the risky asset?
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