How would I complete this using a scientific calculator?

You invest $100 in a risky asset with an expected rate of return of 0.12 and a standard deviation of 0.15 and a T-bill with a rate of return of 0.05.

What percentages of your money must be invested in the risky asset and the risk-free asset, respectively, to form a portfolio with an expected return of 0.09?

How would I complete this using a scientific calculator?

Solutions

Expert Solution

9% = w1(12%) + (1 - w1)(5%)
9% = 12%w1 + 5% - 5%w1
4% = 7%w1
w1 = 0.57
1 - w1 = 0.43
0.57(12%) + 0.43(5%) = 8.99%.

jeff jeffy answered 2 years ago

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