Q6 through Q10 are based on the following given data.

A universe of securities includes a risky stock X, a stock-index fund M, and T-bills whose expected return and standard deviation are:

Universe	E(r)
X	15%	50%
M	10	20
T-bills	5	0

The correlation coefficient between X and M is -0.2.

6. Use the formula in footnote 1, p. 156 in your textbook, to find the minimum-variance portfolios weights, i.e., w_X = ___.1818_____ and w_M = ______.8182_____. Use 4 decimal places of accuracy.

7. Use formula 6.10 in p. 160 in your textbook to find the weights of the tangency portfolio, i.e., w^t_X = ____.2564_______, and w^t_M = ____.7436__________. Use 4 decimal places of accuracy.

8. Estimate the Sharpe ratio. S = _______34.64__________. Use 2 decimal places.

9. Express the capital allocation line, CAL, in y = a + bX form where a and b are numbers.

Answer: ____________________

10. Suppose an investor places 2/9 of her complete portfolio in the risky tangency portfolio, and the remaining in T-bills. Calculate her complete portfolios expected return, std dev, and Sharpe ratio.

E(r_p) = _________; _p = ___________; and S = ____________. Use 2 decimal places & % when needed.

(Use the reverse side of the printed page to show handwritten workings for Q6 through Q10).

PLEASE SHOW ALL WORK!