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A market contains two stocks. The following information is known: - The returns of the stocks are independent - Stock 1 has an average return
A market contains two stocks. The following information is known: - The returns of the stocks are independent - Stock 1 has an average return of \5 and a risk of \10 - Stock 2 has an average return of \10 and risk of \20 a) Find the weights of all portfolios with risk \20 and the returns of these portfolios. (5 marks) b) Find the weights of the portfolio with the minimal possible risk. (5 marks) c) Calculate the return and risk of the portfolio in part b) (2 marks)
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