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An investors portfolio consists of two stocks (Stock 1 and Stock 2) and a risk free asset with 40% of the portfolio held in Stock
An investors portfolio consists of two stocks (Stock 1 and Stock 2) and a risk free asset with 40% of the portfolio held in Stock 1, 50% held in Stock 2 and the remainder held in the risk free asset. If the return on the risk free asset is 4%, 1 = 0.15, 2 = 0.12, 1 2 = 0.03, 2 2 = 0.02 and 12 = 0.06, where is the return on stock , determine: (i) the investors portfolio (ii)he expected return of the investors portfolio. (iii) the variance of the investors portfolio.
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