# Question

The following information applies to Questions 1a and 1b. The general equation for the weight of the first security to achieve minimum variance (in a two-stock portfolio) is given by

a. Show that w1 = 0.5 when σ1 = σ2.

b. What is the weight of Security 1 that gives minimum portfolio variance when r1,2 = 0.5, σ1 = 0.04, and σ2 =0.06?

a. Show that w1 = 0.5 when σ1 = σ2.

b. What is the weight of Security 1 that gives minimum portfolio variance when r1,2 = 0.5, σ1 = 0.04, and σ2 =0.06?

## Answer to relevant Questions

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