Expected Return	Standard Deviation
Stock fund (S)	16%	34%
Bond fund (B)	10%	25%
Correlation	0.17
MM Fund	5.50%

a) What is the expected return and standard deviation for the minimum-variance portfolio of the two risky funds?

b) Solve numerically for the proportions of each asset and for the expected return and standard deviation of the optimal risky portfolio:

Portfolio invested in the stock		%
Portfolio invested in the bond		%
Expected return		%
Standard deviation		%

c) What is the Sharpe ratio of the best feasible CAL?

d)

Suppose now that your portfolio must yield an expected return of 13% and be efficient, that is, on the best feasible CAL.

Required: a. What is the standard deviation of your portfolio?

What is the proportion invested in the T-bill fund?

What is the proportion invested in each of the two risky funds