Question: Two stocks are available. The corresponding expected rates are r 1 and r 2 ; the corresponding variances and covariances are 1 2 ,

Two stocks are available. The corresponding expected rates are r₁ and r₂; the corresponding variances and covariance’s are σ₁², σ₂², and σ₁₂. What percentages of total investment should be invested in each of the two stocks to minimize the total variance of the rate of return of the resulting portfolio? What is the mean rate of return of this portfolio?

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