Consider the investor in Example 4 2 3 on page 220 Suppose that the returns R1 and R2 on the two stocks have correlation 1 A portfolio will consist of s1 shares of the first stock and s2 shares of the second stock where s1, s2 0 Find a portfolio such that the total cost of the portfolio is $6000 an...

We need the cost to be 6000 dollars so that 50s 1 30s 2 6000 We also need the v ...

Consider the investor in Example 4.2.3 on page 220. Suppose that the returns R1 and R2 on

Question:

Consider the investor in Example 4.2.3 on page 220. Suppose that the returns R1 and R2 on the two have correlation −1. A will consist of s1 shares of the first stock and s2 shares of the second stock where s1, s2 ≥ 0. Find a such that the total cost of the is $6000 and the variance of the return is 0.Why is this situation unrealistic?
Stocks
Stocks or shares are generally equity instruments that provide the largest source of raising funds in any public or private listed company's. The instruments are issued on a stock exchange from where a large number of general public who are willing... Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...