Assume you want to invest in two stocks and two bonds using $10 million to create an evenly weighted portfolio of 2 stocks and 2 bonds that will maximize your return using the list of available stocks and bonds below. Assume the expected risk-free rate is 2%, the yield curve is flat and the market risk premium of the S&P500 is 8%. Assume you can only invest in investment-grade bonds.

Available Bonds Bond A, price $101, 4% semiannual coupon, 10 years, A rated Bond B, price $100, 4% semiannual coupon, 10 years, A rated Bond C, price $99, 5% semiannual coupon, 10 years, BBB rated Bond D, price $90, 6% semiannual coupon, 10 years, CCC rated Bond E price $70, zero-coupon, 10 years, A rated

Available Stocks Stock F, price $25, beta 1.1, dividend $1, ESG score 95, growth 5%, calls $2, puts $1 Stock G, price $35, beta 1, dividend $1.50, ESG score 75, growth 7%, calls $1.50, puts $1 Stock H, price $20, beta, .80, dividend, $1.25, ESG score 99, growth 4%, calls $2.50, puts $2 Stock I, price $18, beta 1.25, dividend $.90, ESG score 88, growth 8%, calls $.75, puts $.50 Stock J, price $30, beta .90, dividend $.75, ESG score 92 , growth 5%, calls $1.25, puts $1

What two stocks and two bonds would you select?

What is the expected return on the combined stock and bond portfolio?

What is the expected annual cash flow on the combined stock and bond portfolio?

What is the modified duration of the bond portfolio to two decimal places?

What is the beta of the stock portfolio rounded to two decimal places?

What is the estimated percentage change in the portfolio value of the two bond portfolio if all risk-free rates fall 1% and all credit spreads widen 2.5%?

What is the estimated percentage change in the value of the two stock portfolio if the S&P500 index falls 5%?