Question: The plot below shows the investment frontier that can be created using stocks (green square) and corporate bonds (red circle). The 100% stock portfolio is

 The plot below shows the investment frontier that can be created

The plot below shows the investment frontier that can be created using stocks (green square) and corporate bonds (red circle). The 100% stock portfolio is shown on the plot as a green square (\#11) with an E[r]=9% and a standard deviation =0.30. The 100% bond portfolio is shown on the plot as a red circle (#2) with an E[r]=6% and a standard deviation =0.15. The line shown is tangent to the frontier at point 7 and has an intercept of .056. Assume the tangency portfolio has an expected return of 7.8%. Assume you have $IU,U and you can borrow and lend. You want to create the most efficient portfolio possible that has an expected return of 9%. How would you create this portfolio

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