Question: Please provide explanation Question 1: Consider the following data: Expected Return Standard Deviation AFund 0.16= 16% 12% B Fund 0.14 = 14% 10% C Fund

Please provide explanation

Question 1: Consider the following data: Expected Return Standard Deviation AFund 0.16= 16% 12% B Fund 0.14 = 14% 10% C Fund 0.12 = 12% 8% The correlation between the returns on the A Fund and the C Fund is .7. The rate on T-bills (which will represent the \"risk ee\" asset) is 6%. Which of the following portfolios would you prefer to hold in combination with Tbills and why? (a) A Fund (b) B Fund (0) C Fund ((1) A portfolio of 60% in the A Fund and 40% in the C Fund

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