Let R 1 and R 2 be the returns from two securities with E(R 1 ) = .03 and E(R
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- Let R 1 and R 2 be the returns from two securities with E(R 1 ) = .03 and E(R 2 ) = .08, VAR(R 1 ) = .02, VAR(R 2 ) = .05, and COV(R 1 , R 2 ) = —.01.
- Plot the set of feasible mean-variance combinations of return, assuming that the two securities above are the only investment vehicles available.
- If we want to minimizerisk, how much of our portfolio will we invest isecurity1?
- Find the mean and standard deviation of a portfolio that is 50% in security 1.