3. Consider historical data showing that the average annual rate of return on the S&P 500 portfolio over the past 85 years has averaged roughly 13%, while the bond portfolio averaged 5%.

a. Calculate the expected return of portfolios invested in bonds and the S&P500 index with weights as follows:

b. Calculate the weights invested in bonds and the S&P500 if the investors total expected required return is 9%.

Wbonds Wstocks 0 1 0.2 0.8 0.4 0.6 0.6 0.4 0.2 0.8 1 0