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A market consists of two stocks, Alfa and Beta. Stock Alfa has mean return 7 % and risk 10%. Stock Beta has mean return 10%
A market consists of two stocks, Alfa and Beta. Stock Alfa has mean return 7 % and risk 10%. Stock Beta has mean return 10% and risk 15%. The returns of the two stocks are independent.
a) Find the weights of the portfolio with the minimum possible risk.
b) Calculate the return and risk of this portfolio.
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