An investor invests 30 percent of his wealth in a risky asset with an expected rate of return of 0.15 and a variance of 0.04 and 70 percent in a t-bill that pays 6 percent. his portfolio's expected return and standard deviation are and respectively.

Expected return on portfolio = 8.7%

The standard deviation of the portfolio will be 6%

Explanation:

In order to find the expected return of the portfolio we will multiply the weight of each of the investment with their expected return and add them.

Weight of risky asset = 0.30

Expected return of risky asset= 0.15

=0.30*0.15=0.045

Weight of T bill = 0.70

Return on T Bill = 0.06

=0.70 *0.06=0.042

Expected portfolio return=0.042+0.045=0.087= 8.7%

In order to find the standard deviation of the portfolio will multiply the standard deviation of the risky asset with its weight only because the T bill has no risk or variance therefore the standard deviation of the portfolio will only be contributed by the risky asset.

Standard deviation of risky asset =(0.04)^0.5 =0.2

Weight of Risky asset = 0.30

=0.30*0.2=0.06

=6%

d, conspicuous consumption is when you try to increase your wealth or social status (and in the case he's trying to create the perception of wealth considering he can't really afford it)