Can you please explain to me how the correct answers are calculated !

Use the information below to help answer questions 1-7

• The risk free rate is 5%
• Portfolios 1-5 were created by weighting Stock X, Stock Y, & Stock Z
• Portfolios 1-4 are corner portfolios
• The covariance between Stock X and Stock Z is 0.035
• Excels solver was used to create the Minimum Variance Frontier (MVF)

1. A two risk asset portfolio with 50% Stock X and 50% Stock Z has a total risk closest to _________. Round your answer to the nearest 0.1%.

1. 4.2%
2. 20.5%
3. 24.1%
4. 27.5%
5. None of the above

2. Your clients portfolio is currently 100% Stock X. Stock W (not listed above) has Sharpe Ratio of 0.50. The correlation of the two stocks is 0.80. Based on this information, you should add Stock W to your existing portfolio. Evaluate the underlined words in italics. True or False?

1. True
2. False

3. Which portfolio is most likely the optimal portfolio?

1. Portfolio 1
2. Portfolio 2
3. Portfolio 3
4. Portfolio 4
5. Portfolio 5

4. Which portfolio is most likely not on the efficient frontier?

1. Portfolio 1
2. Portfolio 2
3. Portfolio 3
4. Portfolio 4
5. Portfolio 5

5. Which of the following statements about MVO using Excels solver is most likely TRUE?

1. To find the optimal portfolio, maximize the portfolios return
2. To find the minimum variance portfolio, minimize the portfolios return
3. To find the minimum variance portfolio, minimize the portfolios total risk
4. To find the minimum variance portfolio, minimize the Sharpe Ratio
5. Since shorting is not allowed, dont check the box that says make unconstrained variables non-negative

6. If shorting were allowed when conducting MVO, the Sharpe Ratio of the optimal portfolio would most likely be lower. Evaluate the underlined words in italics. True or False?

1. True
2. False

7. Your client requires 20% return and gives you $1000 cash to invest in stocks X,Y, or Z. Given the security weights in the corner portfolios, which of the following actions would be required:

1. Buy $400 Stock X
2. Buy $400 Stock Y
3. Buy $500 Stock X
4. Buy $500 Stock Y
5. None of the above

Use the information below to help answer questions 1-7 The risk free rate is 5% Portfolios 1-5 were created by weighting Stock X, Stock Y, & Stock Z Portfolios 1-4 are corner portfolios The covariance between Stock X and Stock Z is 0.035 Excel's solver was used to create the Minimum Variance Frontier (MVF) Portfolio# Return Total Risk Stock X Stock Y Stock Z 26% 35% 100% 0% | 21% 25% 60% 40% 0% 17% 20% 20% 20% 13% 18% 20% 80% 10% 20% 0% 0% 100% 0% 60% 0% 30% 25% 20% 15% 10% 5% 0% 0% 5% 10% 15% 20% 25% 30% 35% 40% Use the information below to help answer questions 1-7 The risk free rate is 5% Portfolios 1-5 were created by weighting Stock X, Stock Y, & Stock Z Portfolios 1-4 are corner portfolios The covariance between Stock X and Stock Z is 0.035 Excel's solver was used to create the Minimum Variance Frontier (MVF) Portfolio# Return Total Risk Stock X Stock Y Stock Z 26% 35% 100% 0% | 21% 25% 60% 40% 0% 17% 20% 20% 20% 13% 18% 20% 80% 10% 20% 0% 0% 100% 0% 60% 0% 30% 25% 20% 15% 10% 5% 0% 0% 5% 10% 15% 20% 25% 30% 35% 40%