Question: Consider two assets A and B for which return distributions can be summarized as follows (ATTACHED ARE THE DISTRIBUTIONS) What is the risk of the

Consider two assets A and B for which return distributions can be summarized as follows

_{(ATTACHED ARE THE DISTRIBUTIONS)}

What is the risk of the minimum risk portfolio composed of these two Stocks? (Hint: Use Solver in Excel to minimize s_p²). Is the risk of the minimum risk portfolio below that of every constituent asset? What is the expected rate of return on the minimum risk portfolio?

1. Consider two assets A and B for which return distributions can be summarized as follows E[ R A ] 3% E[ R B ] 7% 1 % A 1% B2 4 % 2 B 2% 2 A 2 AB = 0 What is the risk of the minimum risk portfolio composed of these two Stocks? (Hint: Use Solver in Excel to minimize p2). Is the risk of the minimum risk portfolio below that of every constituent asset? What is the expected rate of return on the minimum risk portfolio

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