Answer:
8.01%
Explanation:
If risk-free rate of return is 6%
if a risky asset is available with a return of 9%
If standard deviation of the portfolio is 2%.
Portfolio Return if S.D. is 2% = 0.33*6% + 0.67*9%
Portfolio Return = 0.33*0.06 + 0.67*0.09
Portfolio Return = 0.0198 + 0.0603
Portfolio Return = 0.0801
Portfolio Return = 8.01%
Hence, the he maximum rate of return we can achieve if we are willing to accept a standard deviation of 2% is 8.01%