The Queens fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term corporate bond fund, and the third is a T-bill that yields a risk-free rate of 5%. Stock fund Bond fund Expected return 20% 10% Standard deviation 40% 25% p= -0.2 1 Draw the investment opportunity set of the two risky funds. Use investment proportions for the stock fund of 0% to 100% in increments of 20%. What expected return and standard deviation does your graph show for the minimum variance portfolio? 2. What are the optimal weights for two risky funds and its expected return and standard deviation? 3. Suppose that your portfolio must yield an expected return of 14%, what is the proportion invested in the T-bill and each of the two risky funds? 4.The Queens fund manager analyzed expected return of stock and bond fund in 4 different economic conditions. What are the covariance and correlation-coefficient of stock and bond fund? Bond Stock Rate of Return Scenario probability Rate of Return -10 10 Severe recession Mild recession Normal growth Boom 0.1 0.3 0.4 0.2 -30 -10 15 20 5 .5 5. which of the following refers to a different type of portfolio risk? a. Market risk b. Unique risk c. Systematic risk d. Non-diversifiable risk 6. what are the benefits to small investors of investing via mutual funds