For questions 1 to

8, consider the following information:

You invest $150,000.

You can invest in a risky asset (not the market portfolio) with an expected

rate of return of 10,2% and a standard deviation of 17,1%, and a T-bill with a

rate of return of 4,1%. The market portfolio has an expected return of 15% and

a standard deviation of 14%. Assume the CAPM assumptions hold and that all

securities are in equilibrium.

Compute the

expected return of an equally weighted portfolio on the risky asset and the

market portfolio.