An investor invests 30 percent of his wealth in a risky asset with an expected rate of return of 0.15 and a variance of 0.04 and 70 percent in a t-bill that pays 6 percent. his portfolio's expected return and standard deviation are and respectively.

Expected return on portfolio = 8.7%

The standard deviation of the portfolio will be 6%

Explanation:

In order to find the expected return of the portfolio we will multiply the weight of each of the investment with their expected return and add them.

Weight of risky asset = 0.30

Expected return of risky asset= 0.15

=0.30*0.15=0.045

Weight of T bill = 0.70

Return on T Bill = 0.06

=0.70 *0.06=0.042

Expected portfolio return=0.042+0.045=0.087= 8.7%

In order to find the standard deviation of the portfolio will multiply the standard deviation of the risky asset with its weight only because the T bill has no risk or variance therefore the standard deviation of the portfolio will only be contributed by the risky asset.

Standard deviation of risky asset =(0.04)^0.5 =0.2

Weight of Risky asset = 0.30

=0.30*0.2=0.06

=6%

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you will have $2593.74 in 10 years if you set aside $1,000 at 10%

you will have $9321.91 in 20 years if you set aside $2000 at 8%

you will have $1469.32 in 5 years if you set aside $1000 at 8%

you will have $1296.87 in 10 years if you set aside $500 at 10%

you will have $239.66 in 15 years if you set aside $100 at 6%

you will have $4660.96 in 20 years if you set aside $1000 at 8%