Question: Here is Question 5 with a better image quality : Question 5 10 Points (a) What are the main principles of (Markowitz) portfolio theory? How

Here is Question 5 with a better image quality :

Here is Question 5 with a better image quality : Question 5

Question 5 10 Points (a) What are the main principles of (Markowitz) portfolio theory? How does the risk-free lending and borrowing extend the range of investment possibilities (in relation to the efficient portfolio on the efficient frontier)? (b) Details of the shares held in a portfolio are given below: Securities Expected Return Percentage held ... Beta (B) 1.1 0.8 Share A Share B Share C Treasury Bill 14% 10% 18% 2% 26% 18% 31% 25% 1.7 0 Calculate the expected return and beta of this portfolio. How does the risk of this portfolio compare with that of the market portfolio

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