Additional note: t-bill yield is 8%

Expected Return Standard Deviation Stock fund (S) Bond fund (B) 20% 12 30% 15 The correlation between the fund returns is .10. a. What are the investment proportions in the minimum-variance portfolio of the two risky funds, and what is the expected value and standard deviation of its rate of return? b. Tabulate and draw the investment opportunity set of the two risky funds. Use investment proportions for the stock fund of zero to 100% in increments of 20%. c. Draw a tangent from the risk-free rate to the opportunity set. What does your graph show for the expected return and standard deviation of the optimal portfolio? d. Solve numerically for the proportions of each asset and for the expected return and standard deviation of the optimal risky portfolio. e. What is the Sharpe ratio of the best feasible CAL (Capital Allocation Line)? 5. Refer to Question 4. You require that your portfolio yield an expected return of 14%, and that it be efficient, on the best feasible CAL. a. What is the standard deviation of your portfolio? b. What is the proportion invested in the T-bill fund and each of the two risky funds? Expected Return Standard Deviation Stock fund (S) Bond fund (B) 20% 12 30% 15 The correlation between the fund returns is .10. a. What are the investment proportions in the minimum-variance portfolio of the two risky funds, and what is the expected value and standard deviation of its rate of return? b. Tabulate and draw the investment opportunity set of the two risky funds. Use investment proportions for the stock fund of zero to 100% in increments of 20%. c. Draw a tangent from the risk-free rate to the opportunity set. What does your graph show for the expected return and standard deviation of the optimal portfolio? d. Solve numerically for the proportions of each asset and for the expected return and standard deviation of the optimal risky portfolio. e. What is the Sharpe ratio of the best feasible CAL (Capital Allocation Line)? 5. Refer to Question 4. You require that your portfolio yield an expected return of 14%, and that it be efficient, on the best feasible CAL. a. What is the standard deviation of your portfolio? b. What is the proportion invested in the T-bill fund and each of the two risky funds