Question $9(1$ point$)$

You are building a portfolio that invests in a bond fund and a stock index fund. The annual expected return of the bond portfolio is $5\%$ and the annual expected return of the stock index is $10\%.$ The annual standard deviation of the bond portfolio is $5\%$ and the annual standard deviation of the stock index is $15\%.$ The correlation of the bond fund and the stock index is $0\mathrm{.}2.$

Suppose your goal is to have the portfolio variance equal to $0\mathrm{.}01188.$

What percentage of your capital is invested in the bond fund?

$40\%$

$35\%$

$45\%$

$30\%$