Eco4000

Test: MEL2 (2.2, 2.3, 2.4) Time Remaining: 00.08:23 Submit T This Question: 1 pt 1 of 20 (8 complete) This Test: 20 pts poss Question Help Suppose you have some money to invest-for simplicity, $1-and you are planning to put a fraction w into a stock market mutual fund and the rest, 1 - w, into a bond mutual fund. Suppose that $1 invested in a stock fund yields R, after 1 year and that $1 invested in a bond fund yields Ro, suppose that R, is random with mean 0 08 (8%) and standard deviation 0 07, and suppose that R. is random with mean 0 05 (5%) and standard deviation 0 04 The correlation between R, and R, is 0 26 If you place a fraction w of your money in the stock fund and the rest, 1 - w, in the bond fund, then the return on your investment is R = WR + (1-w)Ro Suppose that w = 0.53. Compute the mean and standard deviation of R The mean is (Round your response to three decimal places.) The standard deviation is |(Round your response to three decimal places) Suppose that w = 0 79 Compute the mean and standard deviation of R The mean is |(Round your response to three decimal places) The standard deviation is . (Round your response to three decimal places.) What value of w makes the mean of R as large as possible? w = maximizes M. (Round your response to two decimal places.) What is the standard deviation of R for this value of w? . =for this value of w. (Round your response to two decimal places.) What is the value of w that minimizes the standard deviation of R? w = minimizes the standard deviation of D /Round unior mennnce to hain fiorimal niaros ) Enter your answer in each of the answer boxes 8:56 PM Type here to search 92 9 9/13/2020