Question 2

5 Points

	B	C	D
2	A pension fund manager is considering 3 mutual funds.
3	The first is a stock fund, the second is a corporate bond fund,
4	and the fhird is a Treasury Bill fund.
5	The rate of return on the T-Bill fund is	5.00%
6	You have the following data on the two risky funds:
7		Expected	Standard
8	Fund	Return	Deviation
9	Bond	8.0%	0.2400
10	Stock	28.0%	0.3800
11	Correlation Coefficient (rho)		-.8000

What are the weights for bonds and stocks?

weight of bonds = .6000 Weight of stock = .4000

weight of bonds = .2200 Weight of stock = .7800

weight of bonds = .5400 Weight of stock = .4600

weight of bonds = .5776. Weight of stock = .4224