The market portfolio is defined as a portfolio whose weights are the market cap weights of the respective assets Shares Outstanding Price per share Expected return St Dev Of return 100 $1 50 15 15 stock A 150 $2 00 12 9 Stock B Suppose the correlation is 1, and you can vary the portfolio weights at your will What will be the portfolio weights for a zero risk portfolio with these two assets What will be the expected return of the zero risk portfolio

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Question: The market portfolio is defined as a portfolio whose weights are the market cap weights of the respective assets Shares Outstanding Price per share Expected

The market portfolio is defined as a portfolio whose weights are the market cap weights of the respective assets

Shares Outstanding	Price per share	Expected return	St. Dev. Of return
100	$1.50	15%	15%	stock A
150	$2.00	12%	9%	Stock B

Suppose the correlation is = -1, and you can vary the portfolio weights at your will. What will be the portfolio weights for a zero-risk portfolio with these two assets? What will be the expected return of the zero-risk portfolio?

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