ONLY NEED ANSWER TO #6 & #7

Stock fund (S) Bond fund (B) Expected Return Standard Deviation 20% 12 30% 15 The correlation between the fund returns is .10.

6. Draw a tangent from the risk-free rate to the opportunity set. What does your graph show for the expected return and standard deviation of the optimal portfolio? 7. Solve numerically for the proportions of each asset and for the expected return and standard deviation of the optimal risky portfolio.

The correlation between the fund returns is 10 . 4. What are the investment proportions in the minimum-variance portolio of the rwo risky funds, and what are the expected value and standard deviation of its rate of return? 5. Tabulate and draw the investment opporianity set of the rwo risky funds. Use investment proportions for the stock fund af 0 , to 100 . in increments of 20%. 6. Draw a tangent from the risk-free rate to the opportunity set. What does your graph show for the expected return and standard deviation of the optimal portfolio? 7. Solve numerically for the proportions of each asset and for the expected return and standard deviation of the optimal risky portiolio. 8. What is the Sharpe ratio of the best feasible CAL? 9. You require that your portfolio yield an expected return of 14%, and that it be efficient, that is, on the weepent leasible CAL. a. What is the standard deviation of your portiolio? 6. What is the proportion invested in the money market fund and each of the two risky funds? Q. If you were to use only the two risky funds and still fequire an expected return of 14%, what would be the investment proportions of your portfolio? Compare its standard deviation to that of the optimized portfolio in Problem 9 . What do you conclude? 1. Stocks offer an expected rate of refurn of 18% with a standard deviation of 22%, Gold offers an expected return of 10% with a standard