In your investment portfolio, you have allocated $20,000 to a single stockXYZ Innovations. Assume a risk-free rate of 3%. XYZ Innovations is expected to yield a return of 15% with a volatility of 40%, while the broader market portfolio is anticipated to have a return of 9% and a volatility of 15%. Operating under the Capital Asset Pricing Model (CAPM) assumptions,

 

Identify an investment with the lowest possible volatility while maintaining an expected return equal to XYZ Innovations. Calculate the volatility of this investment.

 

 Identify an investment with the highest possible expected return while having a volatility equivalent to XYZ Innovations. Calculate the expected return of this investment.