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I need detailed and step by step solution 5) PORTFOLIO CHOICE. (Chapter 6 in my lecture notes) You are a portfolio manager considering wether or
I need detailed and step by step solution 5) PORTFOLIO CHOICE. (Chapter 6 in my lecture notes) You are a portfolio manager considering wether or not to allocate some of the money with which you are entrusted tot he market index of Australian stocks. Your assistant provides you with the following historical return information Returns Year Your portfolioAustralian index 1992 1993 1994 1995 1996 1997 54% 24 50% 24% 60% 54 a) Show that the addition of the Australian index (AUS) to your portfolio (your) will reduce risk, at no loss in returns, provided Pyour,AUSyour AUS b) Based on this historical data, could you receive higher returns for the same level of risk by allocating some of your wealth to the Australian index? c) Would it be possible to reduce your portfolio's risk below its current level by investing something in the Australian index
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