Differentiate the money market from the capital market.

Your answer must include:

• a review of their key characteristics
• provide a minimum of 2 financial instruments in each market.

1. Save First Investment Fund Ltd plans to create a portfolio comprising company X and Y shares. The following information relates to these shares.

	X	Y
Expected return	10%	15%
Standard Deviation of return	20%	40%
Correlation of coefficient	0.5

Required:

1. Calculate the expected return of the portfolio by combining 75% of the shares from Company X with the remaining shares from Company Y.

1. Determine the risk of the portfolio given this combination