Suppose that Treasury bills offer a return of about 6% and the expected market risk premium is 8.

7. Suppose that Treasury bills offer a return of about 6% and the expected market riskpremium is 8.5%. The standard deviation of Treasury-bill returns is zero and the standarddeviation of market returns is 20%. Use the formula for portfolio risk to calculate the standarddeviation of portfolios with different proportions in Treasury bills and the market.

particularTreasury billsmarket returnexpected market risk premium return Standard deviation6%014.50%20%8.50% Weights0.50.5 RequirementUse the formula for portfolio risk to calculate the...