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While Portfolio Z Has a Return of 15% with a Standard

question 22

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While portfolio Z has a return of 15% with a standard deviation of 40%, the market portfolio has a 10% return and 10% standard deviation. Given a 5% annual risk-free rate, what is the percentage of portfolio Z will be included in the M2 hypothetical portfolio?


Definitions:

Cardiac Output

The volume of blood the heart pumps through the circulatory system in a minute.

Stroke Volume

The amount of blood ejected by the left ventricle of the heart in one contraction.

Lymphatic System

A subsystem of the cardiovascular system; returns excess interstitial fluid (lymph) to the circulation; defends the body against disease organisms.

Interstitial Fluid

The fluid that surrounds the cells in tissues and is exchanged with the blood, providing nutrients and removing waste materials.

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