Combining the Riskless Asset and a single Risky Asset Assume that you invest W1 proportion of your wealth in security 1 and proportion W2 of your wealth in security 2 You must invest in either 1 or 2,so W1+W2=1 Let 2 be the riskless asset,and 1 be the risky asset (portfolio) Copyright 2009 Pearson Education,Inc.Publishing as Prentice Hall 14Combining the Riskless Asset and a Single Risky Asset  Assume that you invest W1 proportion of your wealth in security 1 and proportion W2 of your wealth in security 2  You must invest in either 1 or 2, so W1+W2 = 1  Let 2 be the riskless asset, and 1 be the risky asset (portfolio) Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 14