A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long term government and corporate bond fund, and the third is a T-bill money market fund that yields a rate of 5.5%. The stock fund and bond fund have expected returns 15% and 9%, and SD 32% and 23% The correlation between them is 0.15

1.) Calculate risky portfolio (with stock and bond fund) return and standard deviation under different weights (0.1 increment).

2.) Calculate the minimal variance portfolio.

3.) Calculate the optimal risky portfolio.

4.) Calculate reward to volatility ratio of the best feasible CAL.

5.) You require that your portfolio yield an expected return of 12%. What is the proportion invested in the T-bill fund and each of the two risky fund?

6.) If you were to use only the two risky funds, and still require an expected return of 12%, what would be the investment proportions of your portfolio? Compare standard deviation of 5 and 6.

7.) Draw the graph.