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discuss this relationship of possible investments to the two assets below Risk-Free rate: 1.0% Asset 1: Expected return 2.0%; Standard deviation 9.0% Asset 2: Expected
discuss this relationship of possible investments to the two assets below
Risk-Free rate: 1.0%
Asset 1: Expected return 2.0%; Standard deviation 9.0%
Asset 2: Expected return 1.2%; Standard deviation 6.0%
Asset 1 Asset 2 Return -1 1 0.090 0.087 100% 90% 80% 70% 60% 0% 10% 20% 30% 40% 2.00% 1.92% 1.84% 1.76% 1.68% 0.090 0.075 0.060 0.045 0.030 0.015 0.000 0.015 0.030 Risk of Portfolio -0.5 0 0.5 0.090 0.090 0.090 0.078 0.081 0.084 0.067 0.073 0.079 0.056 0.066 0.074 0.047 0.059 0.069 0.040 0.054 0.065 0.036 0.051 0.062 0.037 0.050 0.060 0.042 0.051 0.059 0.050 0.055 0.059 0.060 0.060 0.060 Min Max Variation Variation 6.00% 9.00% 6.00% 9.00% 6.00% 9.00% 6.00% 9.00% 6.00% 9.00% 6.00% 9.00% 6.00% 9.00% 6.00% 9.00% 6.00% 9.00% 6.00% 9.00% 6.00% 9.00% 50% 50% 0.084 0.081 0.078 0.075 0.072 0.069 0.066 0.063 1.60% 40% 30% 20% 10% 60% 70% 80% 1.52% 1.44% 1.36% 1.28% 1.20% 90% 0.045 0% 100% 0.060 0.060 The Return - Risk Relationship 2.50% 2.00% 1.50% -1 Return -0.5 1.00% 0 0.5 0.50% 0.00% 0.000 0.010 0.020 0.030 0.040 0.050 0.060 0.070 0.080 0.090 0.100 Risk of portfolio
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