Consider an economy with two risky assets

(yes you can give me pictures)

- Consider an economy with two risky assets s1 and s2. Suppose that the expected rate of return of asset 1 is 10% and that o(1)=10%. The expected rate of return of asset 2 is 5% and 0(2)=20%. The correlation coefficient between s1 and s2 is p(12) = 0.875. a) What is the composition, the expected return and the standard deviation of the minimum variance portfolio? b) Represent in a graph all the combination risk/return that can be obtained with portfolios containing s1 and s2. Clearly identify s1, s2 and the minimum variance portfolio. c) SKKU is a mean-variance investor with risk aversion A=3. SKKU is not allowed to short-sell asset s2 while he can short-sell asset s1. c.1) In a new graph, represent risk/return combinations that are available to SKKU. c.2) What is the composition of SKKU's optimal portfolio d) Let us introduce a risk free asset sf with return rf =10%. Now all short-sales are allowed: d.1) Let portfolio D has the composition XD ={x1=1/3, x2=1/3, xf=1/3,}. Is portfolio D efficient? Explain carefully but concisely why it is or why it is not. d.2.) What is the composition of SKKU's optimal portfolio? (SKKU cannot shorts- sell asset s2