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    Millennium Investments (MI), an investment advisory firm, relies on mean-variance analysis to advise its clients. Mi's advisors make asset allocation recommendations by selecting the mix of assets along the capital allocation line that is most appropriate for each client.
    One of MPs clients, Edward Alverson, 60 years of age, requests an analysis of four risky mutual funds (Fund W, Fund X, Fund Y, and Fund Z). After examining the four funds, MI finds that all four mutual funds are equally weighted portfolios, and that all of the funds, except Fund Z, are mean-variance efficient. MI also finds that the correlations between all pairs of the mutual funds are less than one.
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    Explanation/Reference:
    Explanation:
    The highest returns for each level of risk are provided along the capital market line:

    The appropriate weighring can be determined by recalling the formula for the standard deviation of an investment that combines a risky asset (i.e., the MI-5000) and a risk-free a

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