Consider two assets with expected returns and risk given in the table below.

Blau Schwarz

Mean $0\mathrm{.}150\mathrm{.}12$

Standard

deviation

$0\mathrm{.}100\mathrm{.}08$

The correlation coefficient of the asset returns is $0\mathrm{.}5$ e$)$ Now assume that a new security becomes available, namely the stock of

Weiss, with mean return of $0\mathrm{.}10$ and standard deviation of $0\mathrm{.}06.$ Weiss has a

correlation with Blau of $0\mathrm{.}2$ and a correlation with Schwarz of $1\mathrm{.}0.$ Draw a new

graph with the possible combinations of Weiss with Blau, Weiss with Schwarz,

and Blau with Schwarz. Draw the new efficient frontier for the three assets into

the graph and explain. $($In part e$),$ you do not need to do any numerical

calculations. The graph is approximate but should include points that are exactly

known.$]$