5.18. Compute the tangency and minimum variance portfolios assuming that there are only two stocks: Nike and

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5.18. Compute the tangency and minimum variance portfolios assuming that there are only two stocks:

Nike and McDonald’s. The expected returns of Nike and McDonald’s are .15 and .14, respectively.

The variances of their returns are .04 and .08, respectively. The covariance between the two is

.02. Assume the risk-free rate is 6%.

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