Homework Assignment 1 (4 points) Let A(0) = 100, A(1) = 110, S(0) = 80 and let S(1) (100 with probability 0.6 60 with probability 0.4 (i) For a portfolio with x = 10 shares and y 15 bonds, calculate its values at time O and time 1, V (0) and V (1), the return Ky and the expected return E[Kv] . (ii) Design a portfolio with initial wealth V(0) = 10000 split fifty-fifty (in value) be- tween stock and bonds. (iii) Compute the expected return and risk (as measured by standard deviation) of the portfolio from (ii). Homework Assignment 1 (4 points) Let A(0) = 100, A(1) = 110, S(0) = 80 and let S(1) (100 with probability 0.6 60 with probability 0.4 (i) For a portfolio with x = 10 shares and y 15 bonds, calculate its values at time O and time 1, V (0) and V (1), the return Ky and the expected return E[Kv] . (ii) Design a portfolio with initial wealth V(0) = 10000 split fifty-fifty (in value) be- tween stock and bonds. (iii) Compute the expected return and risk (as measured by standard deviation) of the portfolio from (ii)