Inthisexercise,selectanytwo(AandB)ofthefivecompaniestoformatwo- asset portfolio. Combine the companies so that A has the following percentage weights, 100, 90, 80, 70, 60, 50, 40, 30, 20, 10, and 0.

a. Computetheriskandtheexpectedreturnofeachportfolio.

(7 marks)

b. Plotagraphofexpectedreturnoftheportfolioontheverticalaxisandtherisk on the horizontal axis.

(7 marks)

c. Onyourgraphidentify(i)themean-variancefrontier,(ii)theefficientfrontier (iii) the inefficient frontier (iv) the minimum variance point. Explain the significance of these frontiers or points in investment.