Donna is considering the option of becoming a co-owner in a business. Her investment choices are to hold a risk free asset that has a return of 
and co-ownership of the business, which has a rate of return of 
and a level of risk of 
. Donna's marginal rate of substitution of return for risk 
where 
is Donna's portfolio rate of return and σP is her optimal portfolio risk. Donna's budget constraint is given by 
Solve for Donna's optimal portfolio rate of return and risk as a function of 
, 
and 
. Suppose the table below lists the relevant rates of returns and risks. Use this table to determine Donna's optimal rate or return and risk.
Investment Rate of Return Risk
Risk Free 0.06 0
Business 0.25 0.39
Definitions:
Symbolic Behavior
Actions or gestures that convey a specific message or meaning, often understood within a particular cultural or social context.
Resistance
The act of opposing, standing against, or refusing to comply with something.
Denial
A defense mechanism where a person refuses to accept reality or facts, acting as if a painful event, thought, or feeling did not exist.
Defense Mechanisms
Protective strategies unconsciously applied to avoid the discomfort arising from thoughts or feelings that are not acceptable.
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