Suppose the expected return on the tangent portfolio is 12% and its volatility is 30%. The risk-free rate is 3%. (a) What is the equation of the Capital Market Line (CML)?

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A: Here, we calculate the given as follow;

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A: Answer -

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A: Introduction ;   The expected values is an expected average values for an investments sooner or…

Q: based on the utility curves

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A: Expected pay out (EP) can be calculated by using the following formula.

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A: Since it is an estimation of future value of the asset and their is an element of uncertainty, it…