Using the data from Chapter 1 for Large Stocks and Long-term U.S. Government bonds, calculate: 1) The expected return assuming that the past returns represent the expected future returns 2) Calculate the standard deviation of each portfolio 3) Calculate the expected return for a portfolio weight 50% in each security 4) Calculate the standard deviation of the portfolio from a combination of the two assets 5) Calculate the minimum variance portfolio for a combination of the two assets 6) Plot the efficient frontier including the minimum variance portfolio 7) Now assume there is a risk-free asset with a return of 3%. a. Create the new efficient frontier b. Identify the weights of the risky assets in the market portfolio c. Assume an investor has a coefficient of relative risk aversion of 15. Find the investors optimal complete portfolio. Average Annual Returns for Five Portfolios and Inflation, 19262015 Investment Average Return 11.99 17.5 6.5 Large-company stocks Small-company stocks Long-term corporate bonds Long-term government bonds U.S. Treasury bills Inflation 6.2 3.6 30 Average Annual Returns and Risk Premiums for Five Portfolios, 19262015 Average Return 11.9% 175 Investment Large-company stocks Small-company stocks Long-term corporate bonds Long-term government bonds US Treasury bills Risk Premium 8.3% 139 29 6.5 62 26 36 0.0