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how to solve question three using the numbers provided below 2. Sarah's response to investing your 401(k) account entirely in East Coast Yachts stock has

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2. Sarah's response to investing your 401(k) account entirely in East Coast Yachts stock has convinced you that this may not be the best alternative. Because you are a conservative investor, you tell Sarah that a 100 percent investment in the bond fund may be the best alternative. Is it? 3. Using the returns for the Bledsoe Large-Cap Stock Fund and the Bledsoe Bond Fund, graph the opportunity set of feasible portfolios. 4. After examining the opportunity set, you notice that you can invest in a portfolio consist ing of the bond fund and the large-cap stock fund that will have exactly the same standard deviation as the bond fund. This portfolio also will have a greater expected return. What are the portfolio weights and expected return of this portfolio? 5. Examining the opportunity set, notice there is a portfolio that has the lowest standard deviation. This is the minimum variance portfolio. What are the portfolio weights, expected return. and standard deviation of this portfolio? Why is the minimum variance portfolio Reprn Standard Deviation Bledsoe S&P 500 Index Fund Bledsoe Small-Cap Fund Bledsoe Large-Company Stock Fund Bledsoe Bond Fund 11.04% 16.14 12.15 6.93 18.45% 29.18 24.43 9.96 6. What portfolio allocation would you choose? Why? Explain your thinking carefully

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