Suppose that to short a stock you are required to deposit an amount equal to the initial price Xo of the stock. At the end of 1 year the stock price is X1 and you liquidate your position. You receive your profit from shorting equal to Xo - X1 and you recover your original deposit. If R is the total relumn of the stock, what is the total return of your short? Two stocks are available. The corresponding rates of return are 1 and 72; the corresponding variances and covariances are 07, oz and 012. What percentages of total investment should be invested in each of the two stocks to minimise the total variance of the rate of return of the resulting portfolio? What is the mean rate of return of this portfolio? Describe the assumptions of the one-fund theorem. Describe the implications of this theorem in terms of the funds investors should consider in a market that satisfies these assumptions, Suppose that a market consists of 11 uncorrelated assets. You may invest in any one, or in a combination of them. The mean rate of return is and is the same same for each asset, but the variances are different. The return of asset i has a variance of 07, for i = 1,...,1. Find the minimum variances point. Express your result in terms of - 1 =1 ]