Question: You are given two risky assets. The first is a stock fund and the second is a bond fund. A T-bill fund yields a rate

You are given two risky assets. The first is a stock fund and the second is a bond fund. A T-bill fund yields a rate of 5%. The T-bill fund is a risk-free asset. The stock fund has an expected return of 23% and a standard deviation of 33%. The bond fund has an expected return of 10% and a standard deviation of 8%. The correlation between the risky fund returns is 2%. If an investor requires the complete portfolio to return 17%, what is the portfolio weight of the optimal risky portfolio in the complete portfolio? What is the weight of stock in the complete portfolio? What is the weight of bond in the complete portfolio?

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