Problem:
Lindsay Brown owns a risky portfolio with a 15% expected return. The riskfree return is 5%.
Required:
Question: What is the expected return on Lindsay's total portfolio if Lindsay invests the following proportions in the risky portfolio and the remainder in the riskfree assets?
a. 120%
b. 90%
c. 75%
Note: Please show how you came up with the solution.