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: Consider the following investment opportunities. Expected Return 16 % Meezan Investment Fund Faisal Investment Fund PSX Fund Standard Deviation 12% 10 % 8% 14
: Consider the following investment opportunities.
Expected Return 16 % Meezan Investment Fund Faisal Investment Fund PSX Fund Standard Deviation 12% 10 % 8% 14 % 12% Your friend who works at SAROH Investment Advisory has done you a favor and told you that the correlation between returns of Meezan Investment Fund and PSX Fund is 0.7. You also know that Pakistan T Bills are offering 6% return. Which of the following portfolios would you prefer to hold in combination with Pakistan T Bills and why? Option 1 - Meezan Investment Fund Option 2 - Faisal Investment Fund Option 3 - PSX Fund Option 4 - A portfolio of sixty percent of Meezan Fund and forty percent of PSX Fund [50 Marks]Step by Step Solution
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