Question: Consider the following two assets: Assets Expected Return E(r) Standard Deviation Bond 7% 5% Stock 13% 20% Suppose that the stock return and the bond

Consider the following two assets:

Assets	Expected Return E(r)	Standard Deviation
Bond	7%	5%
Stock	13%	20%

Suppose that the stock return and the bond return are perfectly negatively correlated (i.e., the correlation coefficient is -1). Find the weight of bond to form a perfectly hedged (i.e., risk-free)portfolio.

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