Question 1

Answer the following questions using the data in the table below:

Risk free Rate 3% Expected Return Risk

Giants 14% 20%

Colts 11% 15%

Dolphins 8% 9%

1. Which portfolio above would be considered the market portfolio? Show why

2. What combination on the capital market line will produce a return of 6%? Comment on this portfolio (weighting); with regards to what it represents and how you would achieve it (construction)

3. What combination will produce a return of 15%? Comment on this portfolio (weighting); with regards to what it represents and how you would achieve it (construction)

4. What is the risk (as measured by standard deviation) of the portfolio you calculated in b and c?