A retail investor is convinced that an efficient diversification of his investment capital can be achieved by constructing a portfolio comprising a Treasury bill (i.e., a risk-free asset) of money market fund and a risky portfolio made up of the bond fund, B, structured on long-term debt securities and stock fund, S, consisting of equity securities. The information below relates to the two-asset risky portfolio comprising the bond fund and the stock fund. INFORMATION Bond fund, B Stock fund, S Expected return, E(R) 11% 17% Standard deviation, s 13% 22% Correlation coefficient, ?BS 0.25 The return on the Treasury bill is a sure rate of 7%. REQUIRED: 3.1. Based on your understanding of modern portfolio theory, discuss the concept of