a$)$ Find the expected return and the level of risk exhibited by the Global Minimum$-$Variance Portfolio. What proportions of your wealth are invested in each of the two stocks?

b$)$ Plot the investment opportunity set of the two risky assets $($You can do this either on Excel, or manually$).$ Use increments of $10\%$ over the range $0-100\%$ in the weights $($or investment proportions$)$ for w$1.$

c$)$ Draw and label the Capital Allocation Line $($CAL$)$ that is just tangential to the opportunity set. Label this point of tangency P$.$ Explain what P is$.$

d$)$ Use the solution derived from the maximization problem of the Sharpe Ratio $($or slope of the CAL$)$ to find the weights invested in each asset at P$.$ You do not have to show the derivation here $$ simply use the results from the maximization problem from the textbook or the slides from the lecture.

e$)$ Calculate the expected return and the standard deviation at P$.$ Calculate the Sharpe Ratio for this CAL.

f$)$ If your risk aversion parameter has a value of A $=3,$ find the composition of the complete portfolio C you would invest in$.$

Comment on your answer and compare with what you would have earned if you were to invest all your wealth in either one of the single stock.

g$)$ Calculate the standard deviation and the expected return of your complete portfolio C$.$

h$)$ Explain how your answers to part g$)$ above change when the investor is:

$1)$ risk loving

$2)$ risk neutral

$3)$ more risk averse than in part $($f$)$ above.

i$)$ Is it worth investing in the FTSE $100$ instead of a two$-$asset portfolio in our case here?