Question: Q) Based on the graph, explain how we can see the tradeoff between risk and return and identify which stock you would prefer to combine

Q) Based on the graph, explain how we can see

the tradeoff between risk and return and identify

which stock you would prefer to combine with the

risk-free asset. What motivates your preference?

Q) Based on the graph, explain how we can see the

tradeoff between risk and return and identify which stock you would prefer

VP of stock 1 WRF 0% 10% 20% 30% 40% 50% 50% 70% 80% 90% 100% Risk of porfolio 1 Return of portfolio 1 WP of stock 2 WRF 100% 0.00% 0.25% 0% 90% 0.76% 0.22% 10% BOX 1.53N 0.19% 20% 70W 2.29% 0.17% 30N 60% 3.05 0.14% 40W SOX 3.82% 0.11% 50% 40% 4.58% 0.09% 60% 30% 5.34% 0.05% 70% 20% 6.11% 0.03% 80% 10% 6.82% 0.00% 90% OX 7.63% -0.03% 100% Risk of portfolio return of portfolio 2 100% 0 0.25% 90% 0.00516596 0.38% 80% 0.01033192 O. SON 70% 0.01549788 0.63% 60 0.02066384 0.75% 50 0.025829799 0.88% AON 0.030995759 1.00% 30 0.036161719 1.13% 20% 0.041327679 1.26% 10% 0.046493639 138% ON 0.051659599 1513 Risk and Return Portfolio 1.60% 1.40% 1.20% 1.00% . 0.80% . . Return 0.60% . 0.40% 0.20% . 2.00% 0.00% 0.00% -0.20% 3.00% 6.00% 4.00% 7.00% 5.00% 1.00% 9.00% 8.00% RISK Return of portfolio 1 return of portfolio 2

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