You have two risky assets stocks and bonds with returns and risk as shown in the...

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You have two risky assets stocks and bonds with returns and risk as shown in the table below. The risk-free rate is 8% and the correlation between the stock and bond funds is 0.10. Tabulate and draw the investment opportunity set of two funds. You may use Excel to speed up your calculations. Cut and paste your Excel table and graph in this document. Draw a tangent line from the risk-free rate to the opportunity set. Stock Fund Bond Fund Expected Return 20% 12% Risk (Std Deviation) 30% 15% Stock Alloc 0 20% 40% 60% 100% Bond Alloc 100% 80% 60% 40% 0% Exp Rtn Std Dev Sharpe Ratio You have two risky assets stocks and bonds with returns and risk as shown in the table below. The risk-free rate is 8% and the correlation between the stock and bond funds is 0.10. Tabulate and draw the investment opportunity set of two funds. You may use Excel to speed up your calculations. Cut and paste your Excel table and graph in this document. Draw a tangent line from the risk-free rate to the opportunity set. Stock Fund Bond Fund Expected Return 20% 12% Risk (Std Deviation) 30% 15% Stock Alloc 0 20% 40% 60% 100% Bond Alloc 100% 80% 60% 40% 0% Exp Rtn Std Dev Sharpe Ratio

Answer rating: 100% (QA)

To calculate the expected return and standard deviation of a portfolio we can use the following formula Expected return of portfolio weight of stock f... View the full answer