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Question 11: Suppose that only three funds are traded in the market (well-diversified funds): Fund A Fund B Fund C Expected Return 0.10 0.15

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Question 11: Suppose that only three funds are traded in the market (well-diversified funds): Fund A Fund B Fund C Expected Return 0.10 0.15 0.20 Standard Deviation 0.15 0.20 0.25 PAB = 0; PAC = 0.5; PBC = -0.5 a. Assuming you would like to invest your money equally in two securities (50%- 50%), which two securities should you choose? b. Would you recommend invest equally-proportion in all three securities? Support your answer with explanation.

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