Consider an economy with a risk-free asset (bills) and two risky assets (bonds and stocks), wherestocks are riskier and more rewarding than bonds, and bonds are more rewarding than bills. Assume that there exists a mixture of bonds and equities that has a higher Sharpe ratio thanjust bonds and just equities. Two investor Anne and Ben share the same beliefs about thestatistical properties of the various assets, but face different borrowing rates. Anne can borrowat the risk-free rate but Ben can only borrow at a higher rate. Draw the set—up in the 0' — E(r) diagram. Show the optimal risky portfolio{s) and highlight the area where the optimal complete porfolio(s) could lie for these investors. Make sure you. clearly label the axes, all,[ three assets, and all relevant tines/carves.

Thomas kratzer is the purchasing manager for the headquarters of a large insurance company chain with a central inventory operation. thomas's fastest-moving inventory item has a demand of 6,000 units per year. the cost of each unit is $100, and the inventory carrying cost is $10 per unit per year. the average ordering cost is $30 per order. it takes about 5 days for an order to arrive, and the demand for 1 week is 120 units. (this is a corporate operation, and the are 250 working days per year.)a) what is the eoq? b) what is the average inventory if the eoq is used? c) what is the optimal number of orders per year? d) what is the optimal number of days in between any two orders? e) what is the annual cost of ordering and holding inventory? f) what is the total annual inventory cost, including cost of the 6,000 units?