Saleh is an investment analyst at Talkin Investment Bank. He needs to invest in an optimal portfolio in order to get full benefit of diversification . He discovered the opportunity set for portfolio A , where the expected return for stock is 20%, expected return for bond is 15%, the standard deviation for stock and bond are 35 % and 25% respectively , and the correlation is C.

a. Calculate weightage of minimum variance by using covariance matrix table.

b. calculate the expected return and stadard deciation of minimum variance portfolio A.

C. If the weightage of optimal risky portfolio is 40% for stock and 60% for bond, calculate the expected return and standard deciation for the optimal risky portfolio A.

d. If T-Bill rate is 6% , calculate the reward-to-volatility ratio of minimum variance and the optimal CAL. Suggest which portfolio is better .

e. draw the graph for MVC and optimal portfolio.

* note : please do not use excel in calculation