Question: Using the information, create a variance-covariance matrix. Then use the matrix you created to answer the following questions. Use the MMULT formula to solve for

Using the information, create a variance-covariance matrix. Then use the matrix you created to answer the following questions. Use the MMULT formula to solve for variance/standard deviation.

Variance of the following stocks:

Stock A: 0.05

Stock B: 0.04

Stock C: 0.08

Expected Returns of following stocks:

Stock A: 10%

Stock B: 8%

Stock C: 15%

Covariance (a,b): 0.0440

Covariance (a,c): 0.0325

Covariance (b,c): -0.0500

Q1 - What is the standard deviation of a portfolio invested 30% in stock A, 25% in stock B, and 45% in stock C?

Q2 - You plan to invest a portion of your money in the portfolio constructed in part a of this question and a portion in a risk-free asset. The risk-free interest rate is 2.5%. What is the expected return on this investment, assuming 25% invested in the risky asset and 75% in the risk-free asset? What is the standard deviation of the return on this investment?

PLEASE SOLVE IN EXCEL AND USE FORMULATEXT TOO

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