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Resulting CAL for the Portfolio when Invest in an Index Fund

Question

Over the next year, expected return on the S&P 500 index (proxy for the optimal risky portfolio), the SMB portfolio, and the HML portfolio are 11%, 6%, and 3%; standard deviation of the returns on the S&P 500 is 27%; risk free return is 2%.

If you invest 80% of your investment budget in an index fund that tracks the S&P 500 and the remainder in the risk-free asset.

Using the above information, draw and clearly label the resulting CAL.

Summary: This question belongs to financial management and discuses about to draw and clearly label the resulting CAL for the complete portfolio when invest in an index fund that tracks S&P 500.

Total word count: image

 

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    Cristina

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  • HWA
    Janete

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  • HWA
    Sandeep

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    Paul Brandon-Fritzius

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    tina Johnson

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  • HWA
    Giuseppe

    works fine.