4. Family Ltd. wishes to buy US 1,000,000 worth of shares in each of two companies from a choice of three companies: X Ltd., Y Ltd. and Z Ltd. that it might wish to acquire at some future date. The three companies are in different industries. Historical data for 5 years on the risk and return of the three companies are provided below:

Company	Annual average returns (%)	Standard deviation of returns (%)
X	11	17
Y	20	29
Z	14	21

Company	Correlation coefficient between returns
X and Y	0.00
X and Z	0.62
Y and Z	0.40

Required:

i). Using suitable computations, advise Family Ltd. on the efficient portfolio to select for investment from your calculation.

ii). Explain whether the companys strategy should be to purchase the most efficient portfolio identified.