Q2) A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money market fund that yields a rate of 3%. The probability distribution of the funds is as follows: + Expected Return Standard Deviation Stock Fund 20% 40% KA Bond Fund 10% 15% Risk-free 3% Correlation 20% a) Find the investment proportions in the minimum variance portfolio (MVP) of the two risk asset (5 points) b) Find the expected return and standard deviation for the minimum variance portfolio (5 points) c) What portion of your wealth should go to S and B respectively to achieve the tangent portfolio (i.e., the portfolio with the highest Sharpe ratio) (5 points) Q3) Consider the following table, which gives a security analyst's expected return on two stocks in two particular scenarios for the rate of return on the market. Assume that both scenarios are equally likely to happen (i.e., probability of scenario 1 = probability of scenario 2=0.5).- Scenarios 12 24 Market Return 5% 25 % Aggressive Stock -2% 38% + Defensive Stock 6% 12% a) What are the betas of the two stocks? (5 points) b) Plot the two securities on the SML graph. Assume that T-bill rate is 6%. (5 points) c) What are the alphas of each? (5 points)