Look back at the calculation for Johnson Johnson and Ford in Section 8 1 Recalculate the expected portfolio return and standard deviation for different values of x 1 and x 2 , assuming the correlation coefficient 12 0 Plot the range of possible combinations of expected return and standard deviation as in Figure 8 3 Repeat the problem for 12 25 FIGURE 8 3 20 18 16 14 12 40 in Ford 2 10 Johnson Johnson 10 15 20 25 30 35 Standard deviation (o),

Question: Look back at the calculation for Johnson & Johnson and Ford in Section 8-1. Recalculate the expected portfolio return and standard deviation for different values

Look back at the calculation for Johnson & Johnson and Ford in Section 8-1. Recalculate the expected portfolio return and standard deviation for different values of x₁ and x₂, assuming the correlation coefficient ρ₁₂ = 0. Plot the range of possible combinations of expected return and standard deviation as in Figure 8.3. Repeat the problem for ρ₁₂ = +.25.

FIGURE 8.3

20 18- 16 - 14- 12 -40% in Ford 2 10- Johnson & Johnson 10 15 20 25 30 35 Standard deviation (o), %

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