1 Explanation The parameters of the opportunity set are: 10/10 points awarded Elrs) = 17%, ElrB) = 13%, os = 38%, OB = 18%, p = 0.12 Scored From the standard deviations and the correlation coefficient we generate the covariance matrix [note that Covirs, rB) = p os x og]: eBook Bonds Stocks Bonds 324 82.08 Stocks 82.08 1,444 Print The minimum-variance portfolio is computed as follows: References 324 82.08 WMin (S) = oB2 - Covers, rs) os2 + OB2 - 2 Covers, rs) = 0.1508 1,444 + 324 - (2 x 82.08) Win (B) = 1 - 0.1508 = 0.8492 The minimum variance portfolio mean and standard deviation are: E(rMin) = (0.1508 0.17) + (0.8492 * 0.13) = 0.1360 OMin = [ws2052 + wp_082 + 2WSWB Covirs, rb)]1/2 = [(0.15082 x 1,444) + (0.84922 x 324) + (2 * 0.1508 * 0.8492 * 82.08)]1/2 = 0.1696