Suppose that securities are priced as if they are traded in a two-parameter economy. You have forecast

Question:

Suppose that securities are priced as if they are traded in a two-parameter economy. You have forecast the correlation coefficient between the rate of return on Knowlode Mutual Fund and the market at .8. Your forecast of the standard deviations of the rates of return are .25 for Knowlode, and .20 for the market How would you combine the Knowlode Fund and a riskless security to obtain a with a beta of 1.6?
Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...