Question: Expected Standard Portfolio frontier Return Deviation Correlation 16.00% Stock fund (S) 15% 32% 0.15 Bond fund (B) 9% 23% 14.00% Risk - free return: 5.50%

Expected Standard Portfolio frontier Return Deviation Correlation 16.00% Stock fund (S) 15% 32% 0.15 Bond fund (B) 9% 23% 14.00% Risk - free return: 5.50% 12.00% 10.00% Expected return on the portfolio 8.00% Expected Standard Ws 1- Ws return on deviation of 6.00% the portfolio the portfolio 4.00% 0% 100% 9.00% 23.00% 2.00% 20% 80% 10.20% 20.37% 40% 60% 11.40% 20.18% 0.00% 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% 60% 40% 12.60% 22.50% 80% 20% 13.80% 26.68% Standard deviation of the portfolio 100% 0% 15.00% 32.00%16.00% 14.00% Optimal Portfolio 12.00% 10.00% 8.00% B Expected return on the portfolio 6.00% 4.00% 2.00% 0.00% 23.5% 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% Standard deviation of the portfolio

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