$*$ON EXCEL$*$ Consider the two stocks below.

The purpose of the question is to analyse the effect of the correlation on both the Global Minimum

Variance Portfolio $($GMVP$)$ and the frontier or envelope. On the worksheet called Question $1$

answer the following two questions.

Allowing for short selling, calculate the GMVP $($give the weights for $x$ and $Y,$ the expected

return, the variance of return and the standard deviation of return for the portfolio$)$ for the

following seven correlation coefficients:

${}_{xY}=-1,-0\mathrm{.}8,-0\mathrm{.}5,0,0\mathrm{.}5,0\mathrm{.}8,1.$

Represent the $7$ GMVPs on a graph. Comment on your findings. Specifically, discuss the effect

of the correlation coefficient on the Global Minimum Variance Portfolio $($GMVP$).$ Identify any

GMVPs that include portfolios featuring short selling $($portfolios with a negative weight

assigned to one asset$).$ Finally, analyse how disallowing short selling impacts the GMVPs that

originally featured short selling.