II. Problems (40 points) Answer each of the questions below completely. Show all your work. 13. (8 points) You own a portfolio of $10,000. The portfolio is composed of a risky asset with an expected rate of return of 12% and a standard deviation of 10%, and a Treasury bill with (a) If youretum of 5% of 12% and a portfolio is co (a) If you want your portfolio to have a standard deviation of 8%, how much money should be invested in the Treasury bill? (b) What is the Sharpe ratio (also known as the reward-to-variability ratio) in this case? 14. Portfolio Theory (12 points) 16.00% 20,00% The following table contains information regarding stock returns of IBM and Google. Expected Return Standard Deviation 10.00% 20.00% Google 15.00% 30.00% In addition, you find the return correlation between IBM and Google is 0.2. The risk-free rate is 5%. (a) What is the expected return of the minimum variance portfolio (MVP) constructed from the two stocks? II. Problems (40 points) Answer each of the questions below completely. Show all your work. 13. (8 points) You own a portfolio of $10,000. The portfolio is composed of a risky asset with an expected rate of return of 12% and a standard deviation of 10%, and a Treasury bill with (a) If youretum of 5% of 12% and a portfolio is co (a) If you want your portfolio to have a standard deviation of 8%, how much money should be invested in the Treasury bill? (b) What is the Sharpe ratio (also known as the reward-to-variability ratio) in this case? 14. Portfolio Theory (12 points) 16.00% 20,00% The following table contains information regarding stock returns of IBM and Google. Expected Return Standard Deviation 10.00% 20.00% Google 15.00% 30.00% In addition, you find the return correlation between IBM and Google is 0.2. The risk-free rate is 5%. (a) What is the expected return of the minimum variance portfolio (MVP) constructed from the two stocks