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12. If you were to use only the two risky funds and still require an expected return of 12%, funds a what would be the

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12. If you were to use only the two risky funds and still require an expected return of 12%, funds a what would be the investment proportions of your portfolio? Co deviation to that of the optimal portfolio in the previous problem. What do you pare its standard conclude? (LO 6-4) 13. Stocks offer an expected rate of return of 10% with a stan ld offers an expected return of 5% with astandard deviation of25%. (L06-3) dard deviation of20%, and a. In light of the apparent inferiority of gold to stocks with r and volatility, would anyone hold gold? If so, demonstrate graphically why one would espect to both mean return do so. b. How would you answer (a) if the correlation coefficient between gold and stocks were 1? Draw a graph illustrating why one would or would not hold gold. Could 8 these expected returns, standard deviations, and correlation represent an equilibrium for the security market? chle to horrow at 12. If you were to use only the two risky funds and still require an expected return of 12%, funds a what would be the investment proportions of your portfolio? Co deviation to that of the optimal portfolio in the previous problem. What do you pare its standard conclude? (LO 6-4) 13. Stocks offer an expected rate of return of 10% with a stan ld offers an expected return of 5% with astandard deviation of25%. (L06-3) dard deviation of20%, and a. In light of the apparent inferiority of gold to stocks with r and volatility, would anyone hold gold? If so, demonstrate graphically why one would espect to both mean return do so. b. How would you answer (a) if the correlation coefficient between gold and stocks were 1? Draw a graph illustrating why one would or would not hold gold. Could 8 these expected returns, standard deviations, and correlation represent an equilibrium for the security market? chle to horrow at

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