Jacob has decided to invest in Treasury bills and a Markowitz portfolio that is determined by the tangent from the risk-free asset to the efficient frontier. The tangent portfolio on the efficient set has an expected return of 18 percent and a standard deviation of 15 percent. Treasury bills are returning 5 percent with a standard deviation of 0 percent (by definition). Jacob decides to invest 40 percent of his funds in T-bills and the rest in the selected portfolio. Calculate the expected return and standard deviation of his portfolio.

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The Answer of Jacob has decided to invest in Treasury bills and a Markowitz portfolio that is determined by the tangent from the risk-free asset to the efficient frontier. The tangent portfolio on the efficient set has an expected return of 18 percent and a standard deviation of 15 percent. Treasury bills are returning 5 percent with a standard deviation of 0 percent (by definition). Jacob decides to invest 40 percent of his funds in T-bills and the rest in the selected portfolio. Calculate the expected return and standard deviation of his portfolio.

Jacob Has Decided to Invest in Treasury Bills and a Markowitz