1) Suppose that the security 1s return r1=0.1355 and standard deviation 0.1535: security 2’s return r2=0.1497 and standard deviation 2…

Question:

1) Suppose that the security 1s return r1=0.1355 and standard deviation 0.1535: security 2’s return r2=0.1497 and standard deviation 2 = 0.2298:correlation coefficient between them is 0.2663. Find the portfolios return and standard deviation.2)Identify 2 points on the mean variance frontier and plot the mean variance frontier on a graph. Mark Y axis, X axis, name of the two points, name of the curve in your plot.3)suppose you have 100,000 and are trying to construct your personal portfolio based on a risk free asset with a rate of return of 6% and the above optimal risky asset. On the same graph, draw capital allocation line, mark risk free rate, tangent point and the slope

Expert Answer:

Answer rating: 100% (QA)

1 To find the portfolio s return and standard deviation we can use the formula for the expected return and standard deviation of a portfolio Expected

View the full answer