# Question: Answer the questions to Problem 1 with data from Chapter

Answer the questions to Problem 1 with data from Chapter 4, Problem 2.

In Chapter 4, Problem 2

In Chapter 4, Problem 2

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For Problem 2, find the composition of the portfolio that has minimum variance for each of the two security combinations you considered. Given the following information, what is the optimum portfolio if the lending and borrowing rate is 6%, 8%, or 10%? Assume the Lintner definition of short sales. A. If the Blume adjustment equation is fit and the appropriate equation is βit + 1 = 0.41 + 0.60 βi, t What is your best forecast of beta for each of the stocks in Question 1? B. If the parameters of the Vasicek technique ...Given a three-index model such that all indexes are orthogonal, derive the formulas for the expected return, variance, and covariance of any stock. What is the optimum portfolio assuming short sales if RF = 5% and p = 0.5? Use the data in Problem 4. In Problem 4Post your question