Chapter 11 Return and Risk 383 10-year Annual Return 8.5% 13.5 8.8 6.3 Standard Deviation Red Rock Hang Seng Index Fund Red Rock Small-Cap Fund Red Rock Large-Cap Fund Red Rock Bond Fund 21 .9% 24.5 22.88 9.1 Questions 1. Considering the effects of diversification, would Samson advise you to invest 100 per- 2. Samson's response to investing all your pension money in Sunshine Consultancy cent of your pension money in Sunshine Consultancy Services stock? Services stock has convinced you that this may not be the best alternative. You are a conservative investor, you tell Samson that investing all the pension money into a bond fund may be the best alternative. Is it? 3. Using the returns for the Red Rock Large-Cap Fund and the Red Rock Bond Fund, calculate the opportunity set of feasible portfolios. 4. To have more variety in stock investment, you are also interested in investing in Hang Seng Index Fund. Using the returns for the Red Rock Bond Fund and the Red Rock Hang Seng Index Fund, calculate the opportunity set of feasible portfolios. The cor- relation between the Red Rock Bond Fund and Hang Seng Index Fund is 0.18