QUESTION 5 [30 MARKS] (a) You have just joined a Fund Management Company and have been assigned the task to constitute portfolios based on funds with the following risk return profiles: Fund Z Security Market Value Fund X Rs1,000,000 Fund Y Rs 1,000,000 Rs2,000,000 0.3 0.2 0.14 Expected Return Correlations Fund Y Fund Z 0.1 0.40 -0.20 Variances 0.0625 0.09 0.04 (1) Calculate the expected return of a portfolio (assuming equal weights) of (a) Fund X and Fund Y (2 marks) (b) Fund X and Fund Z (2 marks) (c) Fund Y and Z (2 marks) (ii) Determine the variability in returns on the portfolios mentioned at (). (3 marks each= 9 marks) (iii) Which portfolio is best? Justify your answer. (4 marks) (iv) Determine the variability in returns on a portfolio consisting of funds X, Y and Z based on the market values indicated in the Table