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please help exlplaining formulas and where you get all the numbers to input into the formulas for all parts. I am struggling to figure out
please help exlplaining formulas and where you get all the numbers to input into the formulas for all parts.
A universe of securities includes a risky stock (X), a stock-index fund (M), and T-bills. The data for the universe are: The correlation coefficient between X and M is -.2 . a. Draw the opportunity set of securities X and M. b. Suppose the optimal risky portfolio (O) weights are 26% in X and 74% in M, its expected return, standard deviation, and Sharpe ratio. Compare with the Sharpe ratio of X and M. c. Find the slope of the CAL generated by T-bills and portfolio O. d. Suppose an investor places 2/9 (i.c., 22.22% ) of the complete portfolio in the risky portfolio O and the remainder in T-bills. Calculate the composition of the complete portfolio, its expected return, SD, and Sharpe ratio I am struggling to figure out how i get all the answers.
thanks!
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