Question: • You have $1,000 to invest. If you follow an optimal investment policy, and if you desire to invest $500 in the risk-free asset, what is the mean and standard deviation of your portfolio return?
• Your sister also has $1,000 to invest, but wants to borrow another $1,000 in order to make an investment of $2,000 in the market portfolio M. What will be the mean and standard deviation of her portfolio return?
• Which portfolio is better, yours or your sister's?