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Business, 01.03.2021 22:10 warrenclanrocks

Assume you have all your wealth (a million dollars) invested in the Vanguard 500 index fund, and that you expect to earn an annual return of 12%, with a stan- dard deviation in returns of 25%. Since you have become more risk averse, you decide to shift $ 200,000 from the Vanguard 500 index fund to treasury bills. The T-bill rate is 5%. Required:
Estimate the expected return and standard devia- tion of your new portfolio.

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