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SHOW ALL WORK TO GET RATING You have $500,000 for investment. You allocate $150,000 into a money market fund that invests in T-Bill, $210,000 into
SHOW ALL WORK TO GET RATING
You have $500,000 for investment. You allocate $150,000 into a money market fund that invests in T-Bill, $210,000 into a stock mutual fund and $140,000 into a corporate bond mutual fund. You have the return and risk parameters as follows: Investment Yearly return Yearly standard deviation Correlation Stock mutual fund 12% 15% 0.3 Corporate bond mutual fund 7% 6% The annual T-Bill fund return is 3%. (i) Calculate the ratio of the money market fund, the stock mutual fund and the corporate bond mutual fund within the complete portfolio C (6 points) (ii) Calculate the ratio of the stock mutual fund and the corporate bond mutual fund within the risky portfolio P (4 points) (iii) Calculate the return of the risky portfolio P (10 points) (iv) Calculate the standard deviation (i.e.volatility) of the risky portfolio P (16 points) (v) Calculate the return of the complete portfolio C (12 points) (vi) Calculate the standard deviation (i.e. volatility) of the complete portfolio C (12Step by Step Solution
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