J. P. Morgan Asset Management publishes information about financial investments. Over the past 10 years, the expected return for the S&P 500 was 5.04% with a standard deviation of 19.45% and the expected return over that same period for a Core Bonds fund was 5.78% with a standard deviation of 2.13% (1. P. Morgan Asset Management, Guide to the Markets, 1st Quarter, 2012). The publication also reported that the correlation between the S&P 500 and Core Bonds is -0.32. You are considering portfolio Investments that are composed of an S&P 500 index fund and a Core Bonds fund

a.Using the information provided, determine the covariance between the S&P500and Core Bonds. Round your answer to two decimal places. If required enter negative values as negative numbers.

b.Construct a portfolio that is50% invested in an S&P500 index fundand50%in a Core Bond fund. Round your answers to one decimal place.

r= ____x+_____y

c.Construct a portfolio that is20% invested in an S&P500and 80%invested in a Core bond fund. Round your answers to one decimal place.

r= ____x+_____y

d.Construct a portfolio that is80% invested in an S&P500and 20%invested in a Core bond fund. Round your answers to one decimal place.

r= ____x+_____y

e.Which of the portfolios in parts (b), (c), and (d) above has the largest expected return?

Which has the smallest standard deviation?

Which of these portfolios is the best investment alternative?

Would you prefer investing all of your money in the S&P 500, the Core bond fund, or one of theportfolios?