A managed portfolio has a standard deviation equal to 26% and a beta of .9 when the market portfolio's standard deviation is 22%. The adjusted portfolio P* needed to calculate the M2 measure will have invested in the managed portfolio and the rest in T-bills. A. 84.6%
B. 118%
C. 18%
D. 15.4%

118%

Explanation:

Calculation for the M2 measure invested in the managed portfolio

Using this formula

M2 measure invested in the managed portfolio=Managed portfolio standard deviation standard deviation/Market portfolio's standard deviation

Let plug in the formula

M2 measure invested in the managed portfolio=26%/22%

M2 measure invested in the managed portfolio=118%

Therefore the adjusted portfolio P* needed to calculate the M2 measure will have 118% invested in the managed portfolio and the rest in T-bills

answer; someone must cover the cost associated with the provision of scarce goods in both sectors;