Reference no: EM132465447

The expected return on stocks is 13.95% per year and the expected return on bonds is 4.50% per year. The standard deviation of stock returns is 42.00% and the standard deviation of bond returns 18.00%. The stock, bond and risk-free returns are all uncorrelated. Assume the correlation between stock and bond returns is 0.36 and the correlations between stock and risk-free returns and between the bond and risk-free returns are 0 (by construction, correlations with the risk-free asset are always zero). An investor has the utility function where the investor's utility score = expected return - 1/2 x A x variance, and the investor is considering investing in the optimal risky portfolio and the risk-free asset from problem 5. If the investor's coefficient of risk aversion constant A is 1.75

Using the data from problem 7, what is the expected return on this investor's complete portfolio? Enter your answer rounded to two decimal places. Do not enter % in the answer box.