o-00AP 4,8 Minimum variance portfolio: w 0+0% -2030 AP 18 Portfolio expected return (two risky assets): E(rp)=w,E(r;)+w,E(r;) Portfolio variance (two risky assets): 0} = wo? +wo +2w,w,0,02P12 Use the following information to answer questions: Your employer gives you a choice to invest in a stock fund and a bond fund for your retirement portfolio. The expected returns, return standard deviations, and the correlation coefficient between the two funds are given in the following table. Expected Return (Stock) Expected Return (Bond) Std. Dev. (Stock) Std. Dev. (Bond) correlation 15% 7% 30.00% 15.00% 0.25 a) If you invest 50% in stock and 50% in bond, what is the expected return and standard deviation of your portfolio? b) As a conservative investor, what should be your investment weights in the two funds so that your portfolio variance will be at its minimum level (namely the minimum variance portfolio)