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# Assets: Minimum Variance Portfolio; Yield Expected Return

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Questions

Assume that there are three assets available. A is a risk-free asset with that yields a rate of 8%. The other two assets, B and S are risky asset with the following attributes.

Asset Expected Return Standard deviation
A
B 12% 15%
S 20% 30%

Correlation between assets B and S is 0.1.

Question 1:
To determine the investment proportions in the minimum-variance portfolio of the two risky assets, the expected value and standard deviation of its rate of return. I did the following : {see attachment}

Question 2:
To draw the investment opportunity set of the two risky funds. I used investment proportions for the stock funds of zero to 100% in increments of 20%.
Tabulate the investment opportunity set of the two risky funds {see attachment}
Draw the investment opportunity set of the two risky funds {see attachment}

Question 3:
If using only risky assets S, and B, to set up portfolio to yield an expected return of 14%, I did the following {see attachment}

Question 4:
Using all three assets A, B, and S, how can I set up portfolio to yield an expected return of 14%? What would be the standard deviation this portfolio? What proportion of each asset invested?

Question 5:
Assuming the borrowing is not allow, to construct a portfolio of only risky assets S, and B, with an expected return of 24%. What would be appropriated portfolio proportions? Consequently, what are their standard deviations? If the borrowing is allowed at the risk free rate, how much less the standard deviation would be?