4. (16 points) You plan to invest in Stock X, Stock Y, or some combination of the two. The expected return for X is 10 percent, and ox = 10 percent. The expected return for Y is 14 percent, and Oy = 15 percent. The correlation coefficient of two stocks' return is -1. a. (3 points) If the portfolio only consists of stock X and Y, what is the possible minimum risk of portfolio? What is the weight of stock X in the minimum risk portfolio? b. (3 points) On the diagram of portfolio return and risk, graph the attainable set of portfolios in the space below question c. Indicate which part of the attainable set is efficient on your graph. c. (4 points) Now suppose we add a riskless asset to the investment possibilities. If current risk free return rate is 12%, indicate new efficient frontier on your graph below. d. (3 points) draw indifference curves for two investors with different degree of risk aversion on your graph above. Indicate which one has higher risk aversion degree on your graph. Use the space below to explain why. e. (3 points) Indicate the optimal portfolio for each of the two investors on your graph above. Use the space below to explain why the results make sense to you in terms of investors' preferences. 4. (16 points) You plan to invest in Stock X, Stock Y, or some combination of the two. The expected return for X is 10 percent, and ox = 10 percent. The expected return for Y is 14 percent, and Oy = 15 percent. The correlation coefficient of two stocks' return is -1. a. (3 points) If the portfolio only consists of stock X and Y, what is the possible minimum risk of portfolio? What is the weight of stock X in the minimum risk portfolio? b. (3 points) On the diagram of portfolio return and risk, graph the attainable set of portfolios in the space below question c. Indicate which part of the attainable set is efficient on your graph. c. (4 points) Now suppose we add a riskless asset to the investment possibilities. If current risk free return rate is 12%, indicate new efficient frontier on your graph below. d. (3 points) draw indifference curves for two investors with different degree of risk aversion on your graph above. Indicate which one has higher risk aversion degree on your graph. Use the space below to explain why. e. (3 points) Indicate the optimal portfolio for each of the two investors on your graph above. Use the space below to explain why the results make sense to you in terms of investors' preferences