Michael and Janine are both investors wanting to purchase investment portfolios. The expected return, standard deviation and beta of various investments are shown in the following table:

Investment Average Return over Last Year (%PA) Standard Deviation (%pa) Beta

APO Pty 17 12 2.2

Bona Ltd 12 10 1.3

Market Index 10 2 1

10 Year Bond 4 2 0

Michael wants a portfolio that has an expected return of 8% pa and that contains only APO Pty and 10 year bonds.

Janine wants a portfolio with a 26% weighting in APO Pty and a 74% weighting in Bona Ltd shares. The correlation coefficient between the returns of the shares in APO Pty and Bona Ltd is 0.7.

a) Calculate the percentage of each share that Michael should include in his portfolio to achieve his desired results. Give your answers as a percentage to the nearest percent.

APO Pty: _____ % PA

Bona Ltd: _____ % PA

10 Year Bond: _____ % PA

b) Janine is interested in finding out how risky her portfolio is. Calculate the standard deviation of Janine's portfolio. Give your answer as a percentage to 2 decimal places.

Standard deviation: _____ % PA