1. Now compute the slope of the capital allocation line and show your overall portfolio’s point on the line. Does it lie above, below, or on the line? Explain and prove why. 2. Using the information...

1. Now compute the slope of the capital allocation line and show your overall portfolio’s point on the line. Does it lie above, below, or on the line? Explain and prove why.

2. Using the information from question 5, find your degree of risk aversion and the optimal percentage of funds allocated to the risky assets and the risk-free asset.