Question: which are you better off doing? The expected return for asset A is 6.00% with a standard deviation of 4.00%, and the expected return for

which are you better off doing?

The expected return for asset A is 6.00% with a standard deviation of 4.00%, and the expected return for asset Bis 10.00% with a standard deviation of 7.00%. Based on your knowledge of efficient portfolios, fill in the blanks in the following table with the appropriate answers. Proportion of Portfolio in Security A Proportion of Portfolio in Security B Expected Portfolio Return Standard Deviation Op (%) WE 0.00 0.25 Case I (PAB = -0.6) 4.0 Case III (PAB = 0.8) 4.0 6.00% 7.00% 2.4 Case II (PAB = 0.3) 4.0 3.9 4.5 5.6 7.0 WA 1.00 0.75 0.50 0.25 0.00 4.5 0.50 2.8 5.2 0.75 1.00 8.00% 9.00% 10.00% 0.84 Therefore, you are better The minimum risk portfolio allocation to asset A within the portfolio for case II is off selling asset B short holding asset A in the portfolio including a third asset in the mix

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