An investor's portfolio consists of two stocks (Stock 1 and Stock 2) and a risk-free asset...

 

 
 
 

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An investor's portfolio consists of two stocks (Stock 1 and Stock 2) and a risk-free asset with 40% of the portfolio held in Stock 1, 50% held in Stock 2, and the remainder held in the risk-free asset. If the return on the risk-free asset is 4%, Er1 = 0.15, Er2 = 0.12, Er1 2 = 0.03, Er2 2 = 0.02 and Er1r2 = 0.06, where ri is the return on stock i, determine (i) the investor's portfolio (ii) the expected return of the investor's portfolio. (iii) the variance of the investor's portfolio. An investor's portfolio consists of two stocks (Stock 1 and Stock 2) and a risk-free asset with 40% of the portfolio held in Stock 1, 50% held in Stock 2, and the remainder held in the risk-free asset. If the return on the risk-free asset is 4%, Er1 = 0.15, Er2 = 0.12, Er1 2 = 0.03, Er2 2 = 0.02 and Er1r2 = 0.06, where ri is the return on stock i, determine (i) the investor's portfolio (ii) the expected return of the investor's portfolio. (iii) the variance of the investor's portfolio.